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The sudden loss in income is causing a growing number of Americans to tap their retirement savings accounts, according to a new study released Wednesday by Bankrate.
About 31 million workers, or roughly 27 percent of working and unemployed individuals, are raiding, or plan to access, their retirement accounts to make ends meet, the study found. Fourteen percent of Americans have already used funds from their retirement accounts, and 13 percent plan to do so.
The number is even starker among unemployed Americans, half of whom have either withdrawn money from the account or plan to do so, compared with 22 percent of employed individuals.
Most likely to dip into their retirement savings were millennials, or those between the ages of 24 and 39, and the lowest-income households (earning less than $30,000). One in five millennials with a retirement savings account said they had used some to supplement their income since the outbreak, compared with just 8 percent of Gen Xers and 10 percent of baby boomers.
“This is most pronounced among younger households, who may miss out on decades of future compounding if forced to turn to their retirement savings during these trying times," said Greg McBride, Bankrate's chief financial analyst.
Overall, 18 percent of working or recently unemployed adults are contributing less to their retirement accounts than they were before the crisis started. About 50 percent are contributing the same amount. Only 8 percent are contributing more.
The top reason for the drop in contributions was a loss of income (62 percent) and wanting to keep more cash on hand (33 percent).
Contributions remained fairly high among higher-earning households, however. More than half -- 59 percent -- of Americans earning more than $50,000 continued to set aside the same amount for their retirement accounts, compared to 39 percent of those earning less than $50,000.
"The runaway culprit is loss of income, cited nearly twice as often as the next most common reason of keeping more cash on hand," McBride said.