The well-known 401(k) retirement savings plan, created to help boomers cope with the decline in defined benefit plans from corporate America, is filling a new role: Helping older workers before they retire.
Wells Fargo reported that 28 percent more people took loans from 401(k) retirement accounts in the fourth quarter of 2012 compared with the prior-year quarter, as reported by Bloomberg. About 1.8 of participants took out loans, with an average new loan balance rising 7 percent to $7,126. The report was based on 1.9 million participants with plans administered by Wells Fargo.
Noted the article: “Savers in their 50s were the most likely to borrow against their 401(k)s, Wells Fargo says.”
While the total number of workers taking 401(k) plans is low, the report signals a possible trend.
What dynamics do you think are at work leading to this change?
— Sharon Emek, Ph.D.
Founder and CEO