While millions of Americans have little-to-nothing saved for their retirement, new data show that Millennials who do are more apt to dip into their retirement funds to cover basic expenses like taking a vacation or even a sabbatical from work.
A new TD Ameritrade survey found that Millennials were more likely than Baby Boomers or Generation X to tap into retirement funds.
More than half of millennials (53 percent) said they would draw from retirement savings to spend during a job loss, cover medical bills (52 percent) or cover their child’s education (52 percent).
Slightly fewer than half said they would take from retirement savings to pay down credit card debt (48 percent), buy a house (47 percent), cover living expenses during a sabbatical (45 percent), cover living expenses during parental leave (45 percent) or make a move (45 percent).
Also, more than 40 percent said they would do so to buy a car, pay for a vacation, cover wedding expenses or pay down education debt.
Molly Passantino, senior retirement specialist at TD Ameritrade, said there are several reasons why it’s not smart to withdraw funds if you can avoid it.
“There is typically a 10 percent penalty on the withdrawal (i.e. if you take out $100k, you really only get $90k),” Passantino said.
The survey found that Baby Boomers were the least likely to tap funds from their retirement accounts. However, when they did, the most common reason (48 percent) was to pay medical bills.