401(k) hardship withdrawals more than double as people raid their retirement savings for emergencies

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everyday lives and forcing them to raid their retirement savings, which only inflicts even more financial pain later.As more people turn to their 401(k) accounts for hardship withdrawals, workers are jeopardizing their long-term retirement security and their ability to retire on time.My husband, 73, is giving me a life estate in his home, yet leaving his son a $200K Porsche. Is this cause for divorce?More Americans are losing their homes, as foreclosures jump 20%. What’s driving it.Nearly 900,000 new homeowners are underwater on their mortgages, signaling a troubling shift in the housing marketHardship withdrawals have more than doubled in recent years, jumping from 2% in 2018 to 5% in 2024, as workers turn to their 401(k)s for immediate financial needs, Fidelity Investments said. The 5% level was the highest since 2018, when Fidelity started tracking the data.As many as 75% of workers cited the rising cost of living as one of their biggest stressors, and nearly said they lack sufficient emergency savings, the investment firm said.“I’m not surprised given the cost of living we’ve seen increase in the past five years. Emergencies are always happening. Life has just gotten more expensive,” said Kirsten Hunter-Peterson, vice president of workplace thought leadership at Fidelity Investments. “Everything is just costing a higher amount, and people are needing to take a withdrawal because many people don’t have emergency savings. The problem is that, by the time you retire, you’ve hamstrung your growth.”The increase in hardship withdrawals comes as inflation averaged 4.2% for the five years ending in 2024. The annual inflation rate was about 3% as of September 2025.There are rules around tapping retirement funds. With hardship withdrawals, an employee has to prove an “immediate and heavy financial need” under Internal Revenue Service rules — such as funds to avoid eviction or foreclosure, receive medical care, and pay for funeral expenses or tuition. Hardship withdrawals are taxed as ordinary income, and the employee pays a 10% penalty if they’re younger than age 59½. The funds also don’t get repaid to the retirement account.Hardship withdrawals can only be made for the amount necessary to meet the financial need, per IRS rules. Employees without emergency savings are twice as likely to turn to their retirement funds for loans or withdrawals, Fidelity said.Retirement-plan loans also have been on the rise since 2021, Fidelity noted. 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