I'm Coy Wells for U.S. Money Reserve. An increasing number of American consumers are withdrawing money prematurely from their retirement accounts, according to the recent report from Bank of America. 18,000 workers took a hardship withdrawal from their phone case in the third quarter of 2023. This was a 13% increase from the second quarter of 2023, and a 27% increase since the start of the year. Both Vanguard and Fidelity have also reported increased hardship withdrawals.
What is a hardship withdrawal? The IRS defines it as an emergency premature withdrawal from a retirement account made for immediate and heavy financial need. It is also legally limited to the amount necessary to satisfy that need. Also, unlike loans from a retirement account, hardship withdrawals can't be repaid and may carry tax consequences. This is one reason Matt Watson, founder and CEO of financial wellness site Origin, says that hardship withdrawals are the worst way to take money out of 401ks.
Why would consumers do this? The simple answer is that they need the extra cash to make ends meet. According to Lisa Margeson, the managing director of Bank of America's Retirement Research and Insights Group, “Inflation continues to push up the cost of living while reducing the purchasing power of the dollar. Everyday life is getting more expensive and our dollars simply can't buy what they used to.”
That falling dollar is one reason many Americans are converting a portion of their wealth into physical gold. According to the World Gold Council, gold can maintain its purchasing power over the long term. An ounce of gold may be able to buy the same goods and services in 20 years as it can today, maybe even more. That's something you can't say about the dollar. This is why physical gold has long been considered a safe haven asset. It has a historical track record as a store of wealth in the face of inflation, as well as in times of economic volatility.
To learn more about the benefits of owning physical gold at home or as part of a gold backed IRA, and to receive your free gold information kit, call U.S. Money Reserve and speak to one of our dedicated account executives today.
