More than half of Americans who have taken money out of their retirement savings accounts did so to cover basic expenses during the coronavirus pandemic.
A survey conducted by MagnifyMoney, an independent personal finance site owned by the online loan site Lending Tree, showed that 52 percent of 375 people who took money out of those accounts did so to cover expenses like buying groceries and paying rent. Twenty-six percent used the money because of a job loss, and 15 percent withdrew it because of concerns after losing money in the stock market.
MagnifyMoney’s online survey received responses from 1,239 Americans with a retirement savings account and was conducted from April 28 to May 1. It included the 375 people who had already withdrawn funds. There is an overlap in the answers people provided in the survey, as they had the option of choosing multiple answers for why they removed money from their retirement accounts.
MagnifyMoney’s report said the average amount of money people removed from their retirement accounts over the past two months is $6,757.20.
“Our survey revealed that 60% of respondents used their golden-year funds to pay for groceries, 42% spent it on household bills, 31% used it for rent or mortgage payments and 27% used it for debt payments. Another 20% haven’t spent the funds yet,” the report said.
The survey also found that in the past 60 days, 50 percent of people with retirement accounts have not and do not plan to remove money from those accounts. Thirty percent have already removed money from retirement accounts, and 19 percent are planning to.
“Part of the reason that so many Americans are making early withdrawals may be due in part to a provision offered by the coronavirus relief bill that waives the early withdrawal penalty for coronavirus-related withdrawals up to $100,000 from qualified retirement plans and IRAs,” the report states.
Twenty-four percent of respondents said the penalty-free withdrawals were a reason for taking money out of their retirement accounts.
Americans across the country are dealing with the severe economic ramifications of state shutdown orders, which have closed businesses deemed nonessential in an attempt to slow the virus’s spread. About 2.98 million new jobless claims were reported Thursday by the U.S. Department of Labor for the week ending May 9, bringing the total number of unemployment claims during these past eight weeks to 36.5 million, according to CNBC.