401(hey!)
More Americans take risky gamble of loans against their nest eggs
BY KYLE STOCK MONDAY, DECEMBER 5, 2011
PHOTO: The Daily
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Burned by plummeting home prices and steep credit card fees, a growing number of U.S. consumers are tapping 401(k) accounts for extra cash.
The activity has grown in recent years and is peaking at the moment as workers crack open retirement accounts to bankroll holiday gifts. It remains to be seen, however, how many will be able to patch those nest eggs up again.
Almost 19 percent of the country’s 50 million or so 401(k) participants have loans outstanding on their accounts, up from 15 percent five years ago, according to data from the Investment Company Institute. Consumers have borrowed hundreds of billions of dollars from the roughly $3.2 trillion in 401(k) accounts.
And the loans are spread across workers of all ages and income levels.
Paul Guthrie, a senior analyst on space exploration at the Tauri Group, siphoned $25,000 from his 401(k) to buy a condominium in downtown Washington in early 2009."
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