Vanguard 401(k) Hardship Withdrawal Rate Was 6% in 2025, Up From 5%
6% of participants in Vanguard-administered plans that offer a hardship-withdrawal option used it in 2025, up from 5% in 2024. Source: Vanguard How America Saves 2026, updated annually.
How Many People Are Taking 401(k) Hardship Withdrawals?
6% of participants whose 401(k) or other workplace plan offered a hardship-withdrawal option used it in 2025, according to Vanguard How America Saves 2026. That's about 1 in 17 participants offered the option taking money out early for a qualifying need. It covers plans Vanguard administers, not every U.S. worker or saver.
That's up from 5% in 2024. It has risen four years in a row since 2021. Vanguard notes that plan design, easier administration and rule changes, not only household strain, have pushed the rate higher.
SECURE 2.0 let plans rely on participants' own certification of a qualifying hardship, and a separate provision created limited emergency-personal-expense distributions. Vanguard's hardship series does not isolate the effect of either change. The American Distress Index weights the Safety Net & Buffer domain at 20.0%. The national personal saving rate provides separate context; it does not show whether these participants first used up another financial resource.
Key Statistics at a Glance
The American Distress Index currently reads 47.0 (Typical). The composite itself sits higher than 44% of all published quarters since 2005. Hardship withdrawals are context for the index's Safety Net & Buffer domain, whose direct input is the saving rate. A hardship withdrawal records use of a qualifying plan distribution; the aggregate series does not identify what other resources a participant had or the order in which they were used.
What Does the Latest Hardship-Withdrawal Rate Show?
In 2025, the rate was 6%, up from 5% in 2024. Federal hardship rules changed in 2019 and 2020, when the requirement to take a plan loan first was dropped, and in 2020 participants could take separate coronavirus-related distributions instead. This page compares years from 2021 on; earlier years are shown as published but aren't compared with later ones.
2019: 2.3% | 2020: 2% | 2021: 2% | 2022: 3% | 2023: 4% | 2024: 5% | 2025: 6%
401(k) Hardship Withdrawal Rate (%)
Source: Vanguard How America Saves 2026, annual. Participants in Vanguard-administered defined contribution plans that offer hardship withdrawals. Years before the 2019–2020 federal rule change were measured under different rules.
Full data: Vanguard hardship withdrawal rate indicator page (The Cannibalization Rate)
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 series measures hardship withdrawals, not emergency-personal-expense distributions as a separate category. Plans adopted these options at different times, and the series alone does not identify how much either change contributed to any year's rate. It also doesn't separate administrative access from household demand or from other possible factors such as food prices, broader living costs, income, and emergency savings. The dated cannibalization-rate analysis discusses the aggregate series and its evidence limits.
What the Series Can't Separate
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 saving rate: 4.1% in August 2026, down from 4.6% in July 2026 (U.S. Bureau of Economic Analysis data retrieved via FRED) — a national flow of saving, not account balances
- $400 emergency expense (SHED): 37% would use another method or could not pay — the Federal Reserve SHED complement combines several payment methods with inability
- Hardship withdrawals: 6% in 2025, up from 5% in 2024 (Vanguard How America Saves 2026)
- BNPL market estimates — a separate lending measure with different coverage and no person-level link to the Vanguard or SHED samples (see buy now, pay later lending volume)
Movement across several buffer measures is worth tracking, but it does not by itself establish a shared cause. The index's Safety Net & Buffer domain (20.0% weight) uses the saving rate as its input; the other measures here are context. The linked distributional analysis looks at how buffer pressure can differ across income groups. Our current research does not show a fixed lead from the Safety Net & Buffer domain to debt-stress measures.
Hardship Withdrawal Rate: Complete Data
| Year | Hardship Withdrawal Rate |
|---|---|
| 2019 | 2.3% |
| 2020 | 2% |
| 2021 | 2% |
| 2022 | 3% |
| 2023 | 4% |
| 2024 | 5% |
| 2025 | 6% |
Source: Vanguard How America Saves 2026, annual report. Covers defined contribution plans administered by Vanguard (nearly five million participants). Each value is the share of participants in plans that offer the option who took at least one hardship withdrawal during the calendar year. Years before the 2019–2020 federal rule change were measured under different rules. 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% of participants offered a hardship-withdrawal option used it in 2025 — about 1 in 17 participants offered the option, according to Vanguard How America Saves 2026. That was up from 5% in 2024. The figure covers Vanguard-administered plans only.
Is the hardship withdrawal rate at a record high?
Within Vanguard's comparable years, yes: it is the highest of 5 years since 2021. Vanguard has published the rate for earlier years too, but those were measured under different federal hardship rules, so they aren't compared here. It has risen four years in a row since 2021.
What does the Vanguard How America Saves report cover?
How America Saves is Vanguard's annual report on the defined contribution plans it administers: more than 1,300 plans and nearly five million participants. It is built from Vanguard's recordkeeping data, not a survey, and covers contribution rates, asset allocation, loans, hardship withdrawals, and other plan behavior. Each edition reports the previous calendar year.
How do hardship withdrawals connect to household financial distress?
A hardship distribution addresses an immediate and heavy financial need under plan and tax rules, but Vanguard's aggregate rate does not reveal what other financial resources a participant had, whether any were used, or in what order. The American Distress Index tracks household buffers 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 built from recordkeeping data for nearly five 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 calendar year. It counts people, not withdrawals. The full report is published annually, typically in June.
Board of Governors of the Federal Reserve System Survey of Household Economics and Decisionmaking
The Survey of Household Economics and Decisionmaking (SHED) is an annual online survey of U.S. adults about financial well-being, fielded each fall and published the following spring. Its $400 question asks how a person would pay a hypothetical emergency expense.
BEA Personal Savings Rate (PSAVERT)
Monthly, seasonally adjusted measure of personal saving as a percentage of disposable personal income. Published by the Bureau of Economic Analysis and available via FRED. The saving rate is the input to the American Distress Index's Safety Net & Buffer domain.