In a June study, CivicScience looked at how many Americans are tapping into their savings (not including retirement funds) to keep up with the rising costs of living. That still leaves in question how many Americans have needed to reach into their retirement savings since the beginning of the pandemic.

Current CivicScience survey data indicate that a total of 70% of U.S. adults report having some form of retirement fund, whether an IRA, pension plan, or 401(k).

Since the start of the COVID-19 pandemic in 2020, 14% of U.S. adults say they accessed their retirement funds early.

That works out to 23% of people with retirement funds who are not currently retired. In other words, one-in-four Americans who have retirement funds and are still in the labor market have used their retirement funds earlier than expected since the pandemic began.

Additional survey data help to paint the picture of who these Americans are and why they would need to resort to tapping retirement funds, which sometimes involve harsh penalties (such as withdrawing from a 401k plan). Although the CARES Act provided some relief for those taking early withdrawals in 2020, this also came with a slew of stipulations in order to qualify for penalty-free withdrawal.

Americans in the lowest income bracket (earning $50K or less per year) were the most likely to have withdrawn from retirement funds early, followed by those earning $50 to $100K yearly. However, it is important to note that people within all income levels, even 17% of top earners making $150K or more yearly, made early withdrawals.

Consider that, today, 23% of U.S. adults who receive earnings say they currently live paycheck to paycheck, with nothing left over after paying regular expenses each month to save or spend.

Survey results show that a rather large percentage (50%) of those living paycheck to paycheck have tapped into retirement funds early. These Americans are more than twice as likely to have taken early retirement withdrawals as those who don’t live on such tight means.

It comes as no surprise that many U.S. adults who have made retirement fund withdrawals since 2020 find themselves in a precarious financial position today. More than half (56%) say they do not feel secure in their current financial situation – that’s twice as likely as those who did not pull money from their funds.

Those who made early withdrawals are nearly four times more likely to say their biggest source of financial stress is simply managing daily living expenses.

It’s important not to overlook that those who have made early withdrawals tend to skew younger, accounting for more than a quarter of Millennial and 30% of Gen Z adults with retirement funds. While they may have more time to recoup lost savings than older adults who have made early withdrawals, this still places the younger generations at a disadvantage.

And finally, a majority of those who tapped into retirement savings early are also not feeling secure about their retirement savings in general. Nearly two-thirds don’t feel they have enough money invested today. 

Moreover, we are still seeing the fallout effects from the pandemic and the negative impacts it has had on certain sectors of the population, driving a significant percentage of adults to borrow against their retirement. The surveys suggest that those who pulled funds early from retirement savings (younger adults being more affected) appear to continue to remain in poor financial standing today, many living paycheck to paycheck.