More Americans are tapping into their retirement savings for emergencies, with 6% of Vanguard-administered 401(k) participants taking hardship withdrawals in 2025, up from 4.8% in 2024 and a pre-pandemic average of 2%.

The top reasons were avoiding foreclosure or eviction and covering medical expenses, with a median withdrawal of $1,900.

The increase reflects expanded withdrawal rules, more automatic 401(k) enrollment, and the growing importance of retirement accounts as a financial safety net.

Despite this, many participants are financially healthy, with average account balances rising 13% to $167,970 and 45% increasing their savings rates through automatic escalation programs, the Wall Street Journal has reported.

Vanguard notes that strong market gains and professional account management provide a cushion for those facing financial stress.