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Apr 26, 2011

Run on Banks - 1/5 of Americans Cashing out retirement funds

Nearly one-fifth of full-time emphttp://www.thestreet.com/tsc/v2008/photos/all-pics/financial-info-taxes-etc/401k-gone-front-offlead.jpgoyed Americans have raided retirement accounts in the past year to cover emergencies, according to a national Bankrate survey.

Despite increasing signs of a stabilizing U.S. economy, 19 percent of Americans — including 17 percent of full-time workers — have been compelled to take money from their retirement savings in the last year to cover urgent financial needs, the Financial Security Index found.

Though 80 percent of full-time workers didn’t dip into retirement funds, far too many consumers are ill-prepared for emergencies, says Kim McGrigg, manager of community and media relations at Money Management International, a credit counseling agency.

“Perhaps the most alarming thing about these numbers is that they suggest a lack of other options,” she says. “Consumers generally consider using retirement funds only as a last resort.” -  Bankrate