VALLEY FORGE, Penn.—The number of Americans tapping their retirement savings to cover expenses is on the increase.

According to early findings as part of its How America Saves 2025 report, released by Vanguard a record 4.8% of accountholders took hardship withdrawals last year. That’s up from 3.6% in 2023, Vanguard reported, citing data from nearly five-million people with 401(k)-type accounts.

‘Last Resort’

Financial planners and other experts say such withdrawals should only occur as a last resort, with the new research showing the most commonly cited reasons for pulling money out early is to address foreclosure and eviction or to cover medical bills

Before the pandemic, about 2% of account holders took hardship withdrawals annually — less than half the latest share, according to data Vanguard released for 2022.

Other Reasons Cited

Analysts have suggested there could be two other factors at work in the trendline:

• More employers are automatically enrolling employees in retirement plans, which is increasing the number of participants
• Congress has made it easier to request hardship withdrawals in recent years.