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Report: More Low-Income Americans Tap 401(k) Funds as Savings

Posted on 8/27/2014

Greater proportions of lower and middle-income Americans with 401(k)s and IRAs have used them as personal savings vehicles, borrowing to meet present-day needs, according to researchers at the Brookings Institution. About one-fifth of account owners earning under $75,000 had an outstanding loan in 2007, whereas less than 10 percent of account owners earning over $100,000 did.

"Retirement experts see these early-access provisions as a double-edged sword," the researchers wrote. "On one hand, the ability to access funds during tough times makes retirement saving more attractive. Workers might not give so readily to accounts if they are strictly prohibited from accessing these funds before retirement."

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