401(k) Hardship Withdrawals: Current Vanguard Series High (2026)
6.0% of participants offered a hardship-withdrawal option used it in 2025 — 2.6 times the 2019 rate of 2.3%. The rate has risen for 5 consecutive years from its 2020 low. Source: Vanguard How America Saves 2026, updated annually.
How Many People Are Taking 401(k) Hardship Withdrawals?
6.0% of participants whose 401(k) plan offered a hardship-withdrawal option used it in 2025, according to Vanguard How America Saves 2026. That is approximately 1 in 17 participants offered the option drawing from a retirement account to cover a qualifying need.
Here is what makes that number worth sitting with. The rate was 2.3% in 2019, then fell to 1.7% in 2020. The rate has risen for 5 consecutive years from its 2020 low.
The rate continued upward after SECURE 2.0 let plans rely on participant certifications for qualifying hardship needs. A separate SECURE 2.0 provision created limited emergency-personal-expense distributions. Vanguard's hardship series does not isolate the effect of either change. The full trajectory is tracked below. The American Distress Index weights the Safety Net & Buffer domain at 20.0%. Savings exhaustion provides historical context when comparing household buffers with later debt stress.
Key Statistics at a Glance
The American Distress Index currently reads 43.8 (Typical). On average, its inputs sit higher than in 44% of their own quarterly histories. Hardship withdrawals are context for the ADI's Safety Net & Buffer domain, whose direct input is the savings rate. When workers raid retirement to cover today's bills, it can indicate pressure on other buffers such as savings or available credit — one possible sign of financial distress.
What Does the Latest Hardship-Withdrawal Rate Show?
The series fell from 2.3% in 2019 to 1.7% in 2020. The rate has risen for 5 consecutive years from its 2020 low. In the latest year, the rate rose 1.2 percentage points from 2024.
2019: 2.3% | 2020: 1.7% | 2021: 2.1% | 2022: 2.8% | 2023: 3.6% | 2024: 4.8% | 2025: 6.0%
401(k) Hardship Withdrawal Rate (%)
Source: Vanguard How America Saves 2026, annual. Covers ~5 million participants in Vanguard-administered defined contribution plans.
Full data: The Cannibalization Rate indicator page
How Did SECURE 2.0 Change Retirement-Account Access?
SECURE 2.0 changed two distinct access paths. For qualifying hardship distributions, plans may rely on a participant's written certification of the need and amount. Separately, the law created an emergency-personal-expense distribution of up to $1,000 per calendar year that is exempt from the usual 10% additional tax.
Vanguard's chart measures hardship withdrawals, not emergency-personal-expense distributions as a separate category. The hardship rate rose from 4.8% in 2024 to 6.0% in 2025. The series alone does not identify how much either SECURE 2.0 change contributed.
The increase was already underway before SECURE 2.0 took effect. The rate rose from 1.7% in 2020 to 3.6% in 2023. The series does not separate administrative access changes from household demand or possible factors such as grocery-price changes, broader living costs, income growth, and emergency-buffer availability. The cannibalization rate thesis examines whether more households are drawing on long-term savings when other resources are insufficient.
The Policy Paradox
SECURE 2.0 can provide short-term access to funds while reducing retirement balances. Vanguard's annual series shows how often participants use hardship withdrawals, but it cannot by itself distinguish financial need from plan design or administrative access.
What Do Hardship Withdrawals Tell Us About Savings?
Hardship withdrawals sit alongside other measures of household buffers and borrowing. These four sources cover different populations and methodologies:
- Personal savings rate: 2.7% — down from a 7.3% 2019 average (BEA via FRED); sustained well below pre-pandemic levels through the post-2022 cycle
- The $400 Test: 37% can't cover an emergency — the latest Federal Reserve SHED survey continues to show a substantial emergency-savings gap
- Hardship withdrawals: 6.0% — 2.6 times the pre-pandemic rate; 5 consecutive annual increases from the 2020 low (Vanguard How America Saves 2026)
- BNPL adoption is rising while invisible to credit reports — Buy Now Pay Later debt does not appear in NY Fed Household Debt Reports, masking household leverage in aggregate measures (see Phantom Debt)
Co-movement across multiple buffer indicators is relevant to track, but it does not by itself establish a shared cause. The ADI's Safety Net & Buffer domain (20.0% weight) is designed to capture this convergence. The linked distributional analysis examines how buffer pressure can differ across income groups. The current indicator-pair research artifact does not establish a fixed lead from the Safety Net & Buffer domain to debt-stress measures.
Hardship Withdrawal Rate: Complete Data
| Year | Hardship Withdrawal Rate | Year-Over-Year Change | Cumulative Change Since 2019 |
|---|---|---|---|
| 2019 | 2.3% | — | 0.0 pp (0%) |
| 2020 | 1.7% | -0.6 pp | -0.6 pp (-26%) |
| 2021 | 2.1% | +0.4 pp | -0.2 pp (-9%) |
| 2022 | 2.8% | +0.7 pp | 0.5 pp (22%) |
| 2023 | 3.6% | +0.8 pp | 1.3 pp (57%) |
| 2024 | 4.8% | +1.2 pp | 2.5 pp (109%) |
| 2025 | 6.0% | +1.2 pp | 3.7 pp (161%) |
Source: Vanguard How America Saves 2026, annual report. Covers defined contribution plans administered by Vanguard (~5 million participants). "Hardship withdrawal" includes IRS-defined hardship distributions as reported by Vanguard. The series does not identify emergency-personal-expense distributions separately.
Frequently Asked Questions
What is a 401(k) hardship withdrawal?
A hardship withdrawal is an early distribution from a 401(k) retirement plan taken to cover an "immediate and heavy financial need" — typically medical expenses, preventing eviction, funeral costs, or certain home repairs. Unlike a loan, the money is not repaid. A hardship distribution is generally taxable and may also incur the 10% additional tax unless an exception applies. SECURE 2.0 separately created emergency-personal-expense distributions of up to $1,000 per year.
How many people took hardship withdrawals in 2025?
6.0% of participants offered a hardship-withdrawal option used it in 2025 — approximately 1 in 17 participants offered the option, according to Vanguard How America Saves 2026. The rate is 2.6 times the 2.3% pre-pandemic baseline.
Is the hardship withdrawal rate at a record high?
Yes. The 6.0% rate in 2025 is the highest in the Vanguard How America Saves dataset. The rate has risen for 5 consecutive years from its 2020 low.
What does the Vanguard How America Saves report cover?
The Vanguard How America Saves report is an annual analysis of approximately 5 million participants in Vanguard-administered defined contribution retirement plans. It is one of the largest datasets on American retirement behavior. The report covers contribution rates, asset allocation, loans, hardship withdrawals, and retirement readiness metrics.
How do hardship withdrawals connect to household financial distress?
Hardship withdrawals can indicate that other financial resources — savings accounts, available credit, or emergency funds — are insufficient for a qualifying need. If you've reached this point, our guides on understanding bankruptcy options and dealing with debt collectors cover the protections available. The American Distress Index tracks this through its Safety Net & Buffer domain, while treating delinquency and default as separate current measures rather than a fixed-lag outcome.
Data Sources and Methodology
Vanguard How America Saves 2026
Annual report covering ~5 million participants in Vanguard-administered defined contribution plans. The hardship withdrawal rate is the percentage of participants offered a hardship-withdrawal option who took at least one hardship distribution during the plan year. Published annually, typically in June.
Federal Reserve SHED Survey
The Survey of Household Economics and Decisionmaking (SHED) is an annual survey of ~12,000 adults measuring financial well-being, emergency preparedness, and economic vulnerability. The $400 emergency expense question is the most widely cited finding.
BEA Personal Savings Rate (PSAVERT)
Monthly measure of personal saving as a percentage of disposable personal income. Published by the Bureau of Economic Analysis and available via FRED. The savings rate is a core input to the ADI's Safety Net & Buffer domain.