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R.I.P. Retirement: 28% Of Americans Are Raiding Their 401k Plans

Tyler Durden's picture


Via Michael Krieger of Liberty Blitzkrieg blog,

This trend has been in place since the financial crisis, but the fact that it is accelerating is extremely disconcerting.  First off, this is not the kind of behavior that should be witnessed in an “economic recovery.”  Second, we need to remember the huge percentage of Americans on food stamps and/or disability.  As we have discussed previously, many of them also have jobs.  So essentially, a wage and a check from the government is still not enough to survive.  They still need to tap into a loan from their 401k plans.

From the Washington Post:

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.


A report due out this week from the financial advisory firm HelloWallet found that more than one in four workers dip into retirement funds to pay their mortgages, credit card debt or other bills. Those in their 40s have been the most likely culprits — one-third are turning to such accounts for relief.


Fresh data from Vanguard, one of the nation’s largest 401(k) managers, show a 12 percent increase in the number of workers who took loans against their retirement accounts or withdrew money outright since 2008.


The most common way Americans tap their retirement funds is through loans, which must be repaid with interest. Those who withdraw money face hefty penalties. In most cases, they not only incur a 10 percent federal tax penalty but also pay income taxes. The costs are financially harmful to families even as ­money-management firms reap massive fees for handling retirement accounts that ultimately are not used for retirement.

Hint, banksters win again.

In 1980, four out of five private-sector workers were covered by traditional pensions that paid them a fixed benefit based on their salary and length of service once they retired. Now, just one in five workers has a pension, leaving 401(k)s and similar retirement savings accounts as the primary vehicles for retirees to supplement their Social Security benefits.


But millions of Americans, caught between flat wages and high expenses for everything from sending children to college to making home repairs, feel as though they have little choice. The withdrawals have grown substantially in the wake of the financial crisis.


In 2010, 28 percent of participants reported having an outstanding loan against their retirement accounts, an all-time high, according to a survey of 110 large employers by Aon Hewitt, a human resources consultancy.


Fellowes said workers would be better served by establishing emergency savings accounts that steered clear of the potential tax penalties, investment fees, and other risks and costs associated with having money in retirement accounts. Only after establishing an emergency savings fund, he said, should workers plow their money into retirement savings.

If people did the above, then the financial parasites couldn’t take their fees.  Let’s not forget that many employers automatically put people into these 401k plans without even asking them.  From the same article:

In 2006, employers were given broader latitude to enroll employees in 401(k)-type plans unless workers asked not to participate.

This happened to me at Bernstein and I had to call up to tell them I wanted out.

What a joke this nation has become…

Full article here.


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Tue, 01/15/2013 - 16:23 | 3155130 hooligan2009
hooligan2009's picture

hahahaha..i gotta stop watching CNBC..they just said that they were the only people talking about this!!!

Tue, 01/15/2013 - 16:34 | 3155198 Ruffcut
Ruffcut's picture

Social Insecurity will save us all!!!

Can't wait for housing to come back so we can have our ATM's back. Well, it was fun while it lasted.

Next we shall learn to thrive off eating bugs.

Tue, 01/15/2013 - 16:45 | 3155233 redpill
redpill's picture

Cue the financial "advisors" that urgently tell their "clients" that they should "pay themselves first" instead of their grocery bills by pissing away money in a 401k account that the "advisor" makes shit tons of money on through fees and that the federal government could steal at any time.

The only reason to have one of these is if the company does matching funds.


Tue, 01/15/2013 - 17:43 | 3155546 NoDebt
NoDebt's picture

Thread got too long to read everything, so I'm jumping in up here with what may be an important piece of information.  I'm looking at my book right now.  I don't have anything like 28% of participants with outstanding loans.  It's not even anywhere near double digits.

I suspect you add up everyone who touched their plans over the last 5 years (in the middle of the "Great Recession") with a loan or distribution of some kind maybe you could hit that number.

I suspect there may be some double-counting going on here.  I Dunno.  The idea that everyone is suddenly taking out a loan during employment or saying "show me the money" as soon as they leave employment.... sorry, I'm not seeing that kinda tidal wave happening.

Tue, 01/15/2013 - 17:57 | 3155596 Umh
Umh's picture

You have more information than I have. Could they be looking at people who pull out from their 401K when they change jobs?

Tue, 01/15/2013 - 18:12 | 3155633 AlaricBalth
AlaricBalth's picture

According to the in Investment Company Institute, the percentage of participants in a defined contribution benefit plan with loans outstanding was 18.5% in 2011. This number does not include self directed plans such as IRA's.

401(k) Loan Defaults: How Big Is the Leakage and What Can Policymakers Do to Preserve Americans Nest Eggs

"Individuals with 401(k) plans borrow from them as a last resort because the loans are meant for retirement, not ongoing living expenses. Nonetheless, when times are tough—as they have been since the beginning of the Great Recession—many more people with 401(k) plans have no other choice but to borrow from their accounts to maintain even a reduced standard of living. This is very much in evidence in Table 1, which demonstrates, that the percentage of active participants with a 401(k) loan increased from 15.0 percent in 2006 to 18.5 percent in 2011."

Tue, 01/15/2013 - 18:28 | 3155692 Stuck on Zero
Stuck on Zero's picture

Does it include people who pull from their IRAs for college tuition or to purchase a home?


Tue, 01/15/2013 - 19:14 | 3155832 Harbanger
Harbanger's picture

The article says these people are still employed.  I know a few people myself who took at least part of their IRA money out after 2007 and bought pm's.  So some people may just be trying to safeguard some their retirement money before it's all gone.

Tue, 01/15/2013 - 20:03 | 3155987 nmewn
nmewn's picture

I can tell you from experience, I cashed out my IRA in December to keep it away from "them".

I sent 25% of it off yesterday, with the 10% penalty to come in April. The remainder will go into tangible assets. If I lose my job, I'll do the same with the 401k which I quit contributing to January 2.

So I have (will) rendered unto Caesar what is Caesars and my upside is Caesar will have zero idea of my net worth going forward ;-)

Tue, 01/15/2013 - 21:43 | 3156235 Manthong
Manthong's picture

Middle class short squeeze.

No return on savings ever again means no intrinsic holding value to FRNs.

Dump it to any other asset that will hold value or generate revenue.. and that does not include any fiat instrument that adjusts to BS nominal rates.

Tue, 01/15/2013 - 21:42 | 3156238 Shizzmoney
Shizzmoney's picture

A couple of older (white) guys at my job took out their money from my company's 401K after Obama got re-elected.

They're suckers because their money shoud lof never been in there in the first place.

Tue, 01/15/2013 - 21:52 | 3156266 Talleyrand
Talleyrand's picture

More anecdotal evidence - I heard of a fellow who "borrowed" as much as the administrator of his shitty, no-PM-vehicle 401k would allow back in 2009 and bought AGEs. Though he's still paying it back with after-tax wages, he seems quite content with his decision.

Tue, 01/15/2013 - 22:08 | 3156302 Bendromeda Strain
Bendromeda Strain's picture

I have tapped and paid back mine for the maximum amount 3 times now. Bought metal (of various types) all three times, plus did a cash out refi because we still had good equity (still do). Sure, my mortgage hasn't moved much in the last couple years, but the interest I am paying on the retirement loan goes to me, and if SHTF, I will have something to show for that money before it vaporizes.

Tue, 01/15/2013 - 18:39 | 3155731 hooligan2009
hooligan2009's picture

and a bit further down:

Using the Investment Company Institute data above (showing 18.5 percent of all participants with a loan), and Aon Hewitt data on average outstanding loan balance ($7,860),13 along with an estimate of the number of active participants in a defined contribution plan in the United States (72.0 million at the end of 2009),14 we estimate that the outstanding defined-contribution loan balance in 2009 for the U.S. as a whole was $104.7 billion (equal to 0.185 x 72.0 million x $7,860).15

15. This estimate is close to the $108 billion of loans outstanding implied by the Plan Sponsor Council of America. See Plan Sponsor Council of America, PSCA’s 54th Annual Survey of Profit Sharing and 401(k) Plans, 2011 (estimating that loans were 2.4 percent of plan assets of the survey respondents in 2010).

pension assets in the tabel above that bit are an impressive 17.9 trillion...which, at a 5% annuity c. 900 billion in annual pension income..with 150 million in the wrokforce gives a pensoin of 6,000 a year or 120 a!?!


 i might post this bit at the top as well

Tue, 01/15/2013 - 18:05 | 3155618 RafterManFMJ
RafterManFMJ's picture

I cashed out my retirement accounts and ate at Happy Meals at McDonalds for 3 weeks... the hunger .... grows. Now what?

Tue, 01/15/2013 - 21:15 | 3155646 economics9698
economics9698's picture


BK has a fabulous value menu.  Steel Reserve is readably available in convenience stores everywhere and the ho at the park charge $5 on weekdays.


Tue, 01/15/2013 - 19:11 | 3155827 ZeroAvatar
ZeroAvatar's picture

Shine Shoes, Man!

Tue, 01/15/2013 - 16:43 | 3155236 hedgeless_horseman
hedgeless_horseman's picture



I am no CPA, but why wouldn't I take a max loan from my 401k, buy gold, then pay back the loan?  Is that not a pre-tax gold purchase?

Tue, 01/15/2013 - 16:44 | 3155247 redpill
redpill's picture

No because you'd be paying back the loan in taxed dollars.

Tue, 01/15/2013 - 16:46 | 3155256 hedgeless_horseman
hedgeless_horseman's picture



That would make sense, but are you absolutely certain about that?

Tue, 01/15/2013 - 16:47 | 3155266 redpill
redpill's picture

If you have a source of tax-free dollars to pay back your tax-free loan, why wouldn't you just buy the gold with that to begin with?

If you want to play hard ball the trick is to take the 401k loan, buy the gold, lose it in the ocean, and tell them to go fuck themselves.


Tue, 01/15/2013 - 16:48 | 3155273 hedgeless_horseman
hedgeless_horseman's picture



lol.  Great work, redpill, on the Bernanke twitter feed yesterday.  I laughed, I cried, I pissed myself.

Tue, 01/15/2013 - 16:50 | 3155288 redpill
redpill's picture

Makes you wonder if the old Chairsatan actually went back and read any of the raw feed.  My hopes aren't high, but the mere suggestion is lovely.

Tue, 01/15/2013 - 17:02 | 3155354 Supernova Born
Supernova Born's picture

Have your cake and actually get to eat part of it?

GTFO of here!

Tue, 01/15/2013 - 17:01 | 3155365 NotApplicable
NotApplicable's picture

Of course not. One must never awaken cognitive dissonance and expect to remain a functional "expert."

At any given time, he's about a half a lip-quiver away from losing his job. There's no way he'd further endanger his role.

That's okay though, as Twitter has created a wonderful platform for real-time snark. How many people were watching that feed, I wonder?

Social media is becoming quite an interesting means of communication. Sure the early adopters are always porn, attention whores and many other flavors of narcissism, but as always, there's more to come.

Tue, 01/15/2013 - 17:42 | 3155541 WezTheJuic
WezTheJuic's picture

Well, it did do one thing for  sure. 


It kept people busy.



Tue, 01/15/2013 - 17:49 | 3155570 Big Slick
Big Slick's picture

Did you all know that CONTRIBUTIONS (NOT earnings or rolled funds) to Roth IRAs can be withdrawn penalty and tax free?  Basically, Roth IRAs can be treated like saving accounts.  Look it up

Tue, 01/15/2013 - 18:15 | 3155653 Cathartes Aura
Cathartes Aura's picture

keeps "people busy" and feeling important.

and monitored.

Tue, 01/15/2013 - 16:58 | 3155346 FreeNewEnergy
FreeNewEnergy's picture

Wait, I had a 401k once, cashed it out, blew most of it on gold and silver, the rest I spent wisely on liquor and women.

When my boat sank with all the gold and silver on board, I told .gov I had a capital loss and was able to carry it over for three years, paid no taxes.

My accountant friend says what I did was somehow illegal, but .gov didn't seem to notice or care.

I think that if you're crafty enough, the IRS gives you credit and leaves you alone.

I told people in 2006 and 2007 and again in 2008 to cash out their 401k plans, take the hit and put the money somewhere .gov could not find it.

No takers. America: Land of the sleeple (People who look like they're awake, but are actually sleeping (thanks, Ambien). I just coined the term yesterday, calling dibs) and home of the knave (or naive).

Tue, 01/15/2013 - 17:13 | 3155418 s2man
s2man's picture

I took a loan against my 401(k) for a house/land.  Then I withdrew the max I can and put it in PMs, food, and other prep's.  Sounds a lot safer than leaving it at Fidelity.

Tue, 01/15/2013 - 17:53 | 3155584 tlnzz
tlnzz's picture

I pulled a chunk of cash out of my 401 to buy Gen III night vision. Looking ahead.

Tue, 01/15/2013 - 18:07 | 3155622 Iam_Silverman
Iam_Silverman's picture

"Looking ahead."


Tue, 01/15/2013 - 19:52 | 3155956 Disenchanted
Disenchanted's picture

Lucky bastids! I'd have to quit my job to access my 401k funds...unless I have a serious health emergency or am in danger of defaulting on my home mortgage, then I can get a portion of it out.


btw my corporate masters 'generously' match 6% for me.  s/I'm feeling faint now just looking at that large number./s

Any suggestions on gaming SSDI so I can quit and get my stash? (that's more sarc btw)

Tue, 01/15/2013 - 20:16 | 3156020 Au Shucks
Au Shucks's picture

You could do what I did... stop paying your mortgage for a couple months.. when they call you, tell them to send you a letter telling you that if you do not pay, you risk the commencement of foreclosure proceedings.  Send that letter to your retirement company, BAM... get your check.  If you choose, pay the arrears on your mortgage, no major credit ding, no risk, got your dough.  this is exactly what i did, except once I got my check, I decided to tell my mortgage company (Citi) to suck eggs and prove they own my note before I pay another cent.  3 years later, still living in my rather nice house without a mortgage payment or property tax bill.  If they can prove they possess the note, and can produce it for court, that is when i will decided to give 'em the keys or the arrears. 

Resist the debt masters and their institutions at EVERY TURN.

Wed, 01/16/2013 - 15:51 | 3159171 hooligan2009
hooligan2009's picture

sounds like aplan...wont Citi ask for back payments plus interest when/if they find the note?

Wed, 01/16/2013 - 21:34 | 3160639 secret_sam
secret_sam's picture

Depending on the state you're living in, that's when you'll send 'em yer keys.

Tue, 01/15/2013 - 17:26 | 3155476 formadesika3
formadesika3's picture

Just out of curiosity, anyone have any thoughts on what will be raided first, 401Ks or IRAs? Or any reason they wouldn't be hit at the same time?


Wed, 01/16/2013 - 21:35 | 3160643 secret_sam
secret_sam's picture

That's not going to happen any time soon.  The gummit's primary goal right now is to prevent the financial industry from collapsing.

Tue, 01/15/2013 - 17:30 | 3155503 bigrooster
bigrooster's picture

Not a bad plan except for the fact that the IRS will ding you the 10% penality and tax the loan as income.  It is true that you repay the loan with after tax dollars.  But the KEY is that you are paying yourself back the interest and not a bank.

Tue, 01/15/2013 - 22:08 | 3156304 Talleyrand
Talleyrand's picture

...and, should you take out a five year loan, you'll being repaying with FRNs that could have less purchasing power than they do today - esp. if purchasing PMs. Then again, things could change in five years...or sooner.

Tue, 01/15/2013 - 17:52 | 3155580 Meat Hammer
Meat Hammer's picture

My company matches half of what I put in, so I get an automatic 50% return.  However, as I see the inevitable shit slowly approaching the fan, I will try to time it right to quit my job so I can steal my own 401K money from the gubmint, use it to buy PMs through a self-directed IRA, then have a tragic boating accident where I will, undoubtedly, barely survive after having lost all of my gold and silver. 



Tue, 01/15/2013 - 18:25 | 3155680 SilverIsKing
SilverIsKing's picture

Time it right?  Not gonna happen.  Govt will lock you out of those funds and you won't be able to get them after you quit.  GSAs will be thrust upon us as an emergency measure on a Monday morning when you don't expect it.  Good luck though.

Tue, 01/15/2013 - 17:18 | 3155447 chubbar
chubbar's picture

The answer isn't because you are paying back with already taxed dollars (although you are), it's because you are repaying a loan with interest. The 401K is making money (the interest) by making the loan and is therefore making an "investment" and money on that investment, which is the whole purpose of the 401k. The aftertax interest you pay back now becomes pretax investment earnings and you will eventually pay taxes when you withdraw that. So, you are paying back the pretax dollars with aftertax dollars and interest. That makes it OK with uncle sam because he gets to fuck you once again on money you already earned (just the interest technically). Yes, buy the shit out of the PMs anyway you can!

Tue, 01/15/2013 - 17:21 | 3155458 Citxmech
Citxmech's picture

What you should do is cash-out to buy PMs period.  Fuck the fees/penalties.

Tue, 01/15/2013 - 17:48 | 3155548 Supernova Born
Supernova Born's picture

Those early withdrawal taxes are going to look (in retrospect) like the world's greatest bargain given what's coming.

Obama is untouchable, he has the MSM and he is backed by an exponentially growing army of third world, uneducated defectoids.

An "army" marches on its stomach and the FSA is going to gnaw the middle class and upper middle class down to their marrow.

Tue, 01/15/2013 - 16:35 | 3155206 Jason T
Jason T's picture

I stopped watching in 2007 .. haven't even got a TV now for the last 3+ years.

Tue, 01/15/2013 - 17:00 | 3155361 Zap Powerz
Zap Powerz's picture

Jason, good move.  All TV is indoctrination.

There are strange things going on now.  The emptying of 401(k)s is just the latest sign the US is in decline.  As strange as it is, things are only going to get worse.

I see no way the USA, as it is currently known and constituted, will last >10 years considering the accelerated rate of deterioration.


Tue, 01/15/2013 - 16:39 | 3155222 negative rates
negative rates's picture

That's what happens when you trust the Fed to do it's job, and hold down prices. The exact opposite occurs, plus it was stupid to trust the gvt to match those donations. It was just another ponzi that needs to be drained of it's capital. 

Tue, 01/15/2013 - 16:54 | 3155317 JPM Hater001
JPM Hater001's picture

"Those in their 40s have been the most likely culprits — one-third are turning to such accounts for relief."

I didn't so much "dip" into my account as "cash" the freaker out and go silver, which is to say, it isnt paying a single freaking bill, just experiencing gravity day in and day out.

Tue, 01/15/2013 - 17:03 | 3155372 NotApplicable
NotApplicable's picture

Culprit? LOL

Tue, 01/15/2013 - 17:30 | 3155507 JPM Hater001
JPM Hater001's picture

guilty (tail between legs)

Tue, 01/15/2013 - 17:17 | 3155439 LongBalls
LongBalls's picture

If American's were truly smart. They would pay the tax and cash out NOW. It will vanish shortly. Either via corruption, inflation, or seizure. All of which are theft. 

Tue, 01/15/2013 - 16:24 | 3155134 AlaricBalth
AlaricBalth's picture

Sadly, my retirement plan sunk off the coast of Bimini.

Tue, 01/15/2013 - 16:32 | 3155182 kill switch
kill switch's picture

With $460,000,000.00 worth of trinkets at various water locations, you need to stay the fuck away from boats with the screen door bottoms. You do have the coordinates, right?


The kill switch

Tue, 01/15/2013 - 16:36 | 3155208 Cognitive Dissonance
Cognitive Dissonance's picture

For a pair trade go short the dollar and long scuba equipment. :)

Tue, 01/15/2013 - 16:45 | 3155246 AlaricBalth
AlaricBalth's picture

Thanks CD. Already long the scuba gear and thanks to my wife I always seem to be short dollars.

Tue, 01/15/2013 - 16:59 | 3155348 Cognitive Dissonance
Cognitive Dissonance's picture

Next time give her several Silver Eagles to spend instead of dollars. That will at least slow her down a little bit.

<No honey, I wasn't referring to you.> :)

Tue, 01/15/2013 - 22:03 | 3156289 Miffed Microbio...
Miffed Microbiologist's picture

That was cute CD. When I want to make a major purchase Mr Miffed will place a gold maple leaf in front of me and say "ok go get it". I always sit and stare at it, my mind buzzing. It's kind of a Jewish delemma for me (free ham). Every time I hand the coin back. You just need to find the equivalent for Mrs CD. Happy Hunting!


Tue, 01/15/2013 - 17:05 | 3155380 kill switch
kill switch's picture

thanks to my wife I always seem to be short dollars.


That was beautiful +1


The kill switch

Tue, 01/15/2013 - 19:25 | 3155868 ZeroAvatar
ZeroAvatar's picture

Isn't that part of the Bermuda Rectangle?

Tue, 01/15/2013 - 19:57 | 3155969 Disenchanted
Disenchanted's picture

All I can see from here is the Bernank Rectum Tango...

Tue, 01/15/2013 - 16:26 | 3155135 RacerX
RacerX's picture

You can't really blame them. Either they raid their own plans or the Banksters/Govt will do it for them.

"There is no tomorrow"

or maybe more appropriate: "Drainage..."

Tue, 01/15/2013 - 16:43 | 3155242 jimod
jimod's picture

With the correlation of all asset classes and the pitiful few choices offered by Fidelity for my 401k, I took the maximum loan to "get the fuck out of the market"

I paid off a 6% farm mortgage.   Like getting a GUARANTEED 6% return on the money.  And no "in the fucking market risk"

Yeah, I miss the mortgage interest deduction, but I have the peace of mind of owing the money to myself.

Point is

There's lots of reasons to tap the 401k loan option, some good, some bad, some desparate.

 Assuming all the loans are desparate, and putting people's retirement at risk,

that's a hasty, sensationalistic, conclusion, errr, rather a HEADLINE, more for entertainment than education.

Have some fucking standards, for christsake.



Tue, 01/15/2013 - 16:52 | 3155296 BandGap
BandGap's picture

I have twice raided my 401K in the past 2 years. I'm a 52 year old man and have come to the realization that the model I built my retirement around is bogus - translation: the ponzi ran out before I got my cut. I will be raiding it again, shortly, for the payment on more tangible assets. Time to work on my footwork again.

Tried to buy ammunition online today. 9mm and .38 special ammo is drying up. Anyone ever here of aluminum casings and nylon jackets? Didn't buy that crap but people are getting innovative.

Tue, 01/15/2013 - 17:05 | 3155382 NotApplicable
NotApplicable's picture

Had a guy talking to me earlier today about how aluminum casings aren't safe to reload. Otherwise, I dunno.

Tue, 01/15/2013 - 17:24 | 3155471 Citxmech
Citxmech's picture

Blazer aluminum-cased ammunition is for practice only.  I wouldn't reload that crap.

Tue, 01/15/2013 - 18:08 | 3155627 Overfed
Overfed's picture

Plinkin' rounds. They work just fine if you have no plans to reload.

Tue, 01/15/2013 - 16:24 | 3155138 Id fight Gandhi
Id fight Gandhi's picture

Retirement will just be an unattainable dream to most.

Tue, 01/15/2013 - 16:40 | 3155229 ParkAveFlasher
ParkAveFlasher's picture

And THAT'S why I'm in the 28%.

Withdrawing and paying back in a cycle.

Guess what I'm buying with it?

HINT: it's NOT Apple stock...

Tue, 01/15/2013 - 17:49 | 3155567 Iam_Silverman
Iam_Silverman's picture

"Guess what I'm buying with it?

HINT: it's NOT Apple stock..."


Heh!  Smart man.  You and I both know how undervalued Goog and NFLX are!

Tue, 01/15/2013 - 17:07 | 3155391 FreeNewEnergy
FreeNewEnergy's picture

Retirement was always an unattainable dream to most, sponsored and pushed by the FIRE eCONomy.

I have friends with over $500,000 in retirement accounts still working as they approach 60. I keep telling them to quit NOW, but they won't listen.

Meanwhile, I went into semi-retirement at 45 (13 years ago), started my own business with three rules: no employees, don't work too hard and don't get too big. Never pay taxes and while I am not rich, I am very happy.

I, like almost everyone else I know who "retired" will be semi-retired until I croak (I only have another 40 years left; life is such a bitch).

Tue, 01/15/2013 - 18:22 | 3155674 hooligan2009
hooligan2009's picture

Spartacus! :>)

Tue, 01/15/2013 - 18:16 | 3155658 DosZap
DosZap's picture

So essentially, a wage and a check from the government is still not enough to survive. They still need to tap into a loan from their 401k plans.


IF their smart they will use it asap,and game the system like they are, because whatevers left in those is going to be turned into UST's/Bonds.

Tue, 01/15/2013 - 16:25 | 3155139 Cognitive Dissonance
Cognitive Dissonance's picture

I have had two clients leave their job simply so they could roll their 401(k) into an IRA and then make withdrawals. They could take no more loans from the 401(k), having mazed out that option.

The slow squeeze is so much more effective than the fast plunge in looting the middle class of nearly all its wealth.

Tue, 01/15/2013 - 16:26 | 3155143 Id fight Gandhi
Id fight Gandhi's picture

Makes sense. They probably can't get credit after going bust, need something to feed them.

Tue, 01/15/2013 - 16:31 | 3155177 Dr. Richard Head
Dr. Richard Head's picture

I wanted my money out of the 401K program, not to pay bills, but to purchase some PMs.  A new restriction had gone into effect a few months before in that only a fired employee could withdrawal.  I convinced the board to fire me, liquidate, and then rehire.  Presto chango! 

Ask anyone who has a 401k who owns it.  If that person believes they own it, then ask them to inquire about withdrawal.  Good luck with that Buster.

Tue, 01/15/2013 - 18:06 | 3155621 Meat Hammer
Meat Hammer's picture

Brilliant!  I'm going to ask my company to fire me, liquidate, then get my job back.  All they can say is LOL, GTFOH.  Worth a shot.

Tue, 01/15/2013 - 17:04 | 3155379 Henry Chinaski
Henry Chinaski's picture

Exactly.  R.I.P: Middle Class.

Maybe people dipping into their 401k funds are the smart ones.  Spending it before the funds are confiscated in a 401k nationalization to provide universal federal retirement beh-nuh-fitz.

Tue, 01/15/2013 - 17:12 | 3155410 FreeNewEnergy
FreeNewEnergy's picture

CD, yes, but they "left their jobs," which is a huge step in the right direction.

All I can say about my friends (now turning 60) who are still working, have homes paid off and over 1/2 mil in retirement funds, is that they lack imagination (or they actually believe in the system).

Tue, 01/15/2013 - 16:25 | 3155141 Mr Pink
Mr Pink's picture

Everyone just relax....I'm sure they are all using the money to buy gold and silver

Tue, 01/15/2013 - 16:29 | 3155144 Titus Flavius C...
Titus Flavius Caesar Vespasianus Augustus's picture

Well, shit, dogs, what do you expect when Keynesianism rules? Savings are bad, m'kay? and if you're not spending beyond you're means, you're ruining the economy, you goddamned mouth breather! Now - let's give all those nice folks collecting social security and medicare another raise, because, obviously, debt = growth, so we ought to be borrowing more. It's really quite simple. We have to destroy everyone's personal savings to save them from destruction!

Tue, 01/15/2013 - 16:26 | 3155145 madcows
madcows's picture

And how many more have stopped contributing?

Tue, 01/15/2013 - 16:26 | 3155146 ekm
ekm's picture

What have I been telling?


Those guys are dying to play in the stock casino, but..........they've got no freaking money, nada, zilch, zero.


As the spaniards say: NO TENGO DINERO

Tue, 01/15/2013 - 16:26 | 3155148 babylon15
babylon15's picture

Ben Bernanke is very happy about this.  The whole purpose of QE is to force people to raid their retirement accounts.

Tue, 01/15/2013 - 16:49 | 3155278 NotApplicable
NotApplicable's picture

I don't think he's that far up the chain of command. His main goal is fighting all of the fires with his oversize fuel hose. Sure, the vapors will build up to a critical level eventually, but until then, the force of the flow can be used to exstinguish the leading edge of the flames, keeping their nest safe yet another day.

Tue, 01/15/2013 - 16:28 | 3155157 mrdenis
mrdenis's picture

and why not .....spend it befor the Gubment steals it ......

Tue, 01/15/2013 - 16:37 | 3155215 NotApplicable
NotApplicable's picture

Ding, ding, ding, Winnah!

I've kept mine borrowed to the max, using it to pay off other debt, etc.

Besides, all of the interest I pay goes right back into my account, so at worst case, I'm paying two points over prime for money that will be worthless by the time I can withdraw it.

Tue, 01/15/2013 - 16:28 | 3155158 Cdad
Cdad's picture

Like EVERYTHING else in the last four years, simply more evidence that the problem is Wall Street itself, and the unspeakable crimes they have committed.  There is no trust, and therefore there is no capital formation.  And there will not be capital formation until such time as the orange jump suits are handed out to the people who have broken our markets.

Better to raid your 401K than to watch those inflows jammed into everything that Wall Street is selling in its daily upward HFT sessions.  

Who are you people who parade yourselves on The BlowHorn [CNBC] everyday talking about the market like it is still a market?  The jig is up already.

More banker pink slips, please. 

Tue, 01/15/2013 - 16:51 | 3155293 NotApplicable
NotApplicable's picture

Hey now! There is TOO capital formation!

It's just that the formation is eroding.

Tue, 01/15/2013 - 18:21 | 3155668 hooligan2009
hooligan2009's picture

like building sand castles on the beach when the tide is out?

Tue, 01/15/2013 - 17:06 | 3155383 worbsid
worbsid's picture

Don't blame the Banksters, that's what Banksters are supposed to do.  Blame Obama's AG Eric Holder for not enforcing the laws and putting the banksters in jail with Bubba.  If he did convict a few banksters the rest would shape up until there was another crack in the justice system.  This time the crack was at least 1.2 billion wide so that Corzine could walk through since he didn't know anything about the crime ... /sarc 

Tue, 01/15/2013 - 17:21 | 3155457 aerojet
aerojet's picture

The only orange jumpsuits will be for the regular folk who don't get killed fighting off the gun grabbers.  Let's face facts--NY State could have spent all this time bringing true criminals to justice.  It was well within their reach.  Instead, what did we get?  More gun control shoved straight up our asses.  WTF?

Tue, 01/15/2013 - 16:30 | 3155159 Joe Davola
Joe Davola's picture


The most common way Americans tap their retirement funds is through loans, which must be repaid with interest.


But, but, but - they're repaying themselves (with interest).  Much like the supposed interest the SSTF earns on its 'loans' to the general fund.  So it's all double plus good, right?

Tue, 01/15/2013 - 16:28 | 3155160 rguptatx
rguptatx's picture

bbbbbbbbbbbbut the lyin fed says inflation is only 1.5 percent - is this another conundrum?

Tue, 01/15/2013 - 16:31 | 3155164 firstdivision
firstdivision's picture

Good, less money for WallStreet to raid from them.  About time the public wised up and realized that they've been getting fleeced.  The good news is, this helped the markets take off like a rocket.

Or was this the catalyst for the indicies to rocket up?

Tue, 01/15/2013 - 16:29 | 3155166 10PastMidnight
10PastMidnight's picture

What a riveting revelation, perhaps they'll anounce water is wet tomorrow, oh wait that not slated until 2015 after the new growth spurt.

Tue, 01/15/2013 - 16:53 | 3155310 NotApplicable
NotApplicable's picture

What a riveting revelation, perhaps you'll anounce water is wet tomorrow, oh wait that not slated until 2015 after the new growth spurt.

Tue, 01/15/2013 - 16:31 | 3155167 Sophist Economicus
Sophist Economicus's picture



The costs are financially harmful to families even as ­money-management firms reap massive fees for handling retirement accounts that ultimately are not used for retirement.

Hint, banksters win again.



Sorry, I don't read the WAPO message that way.   I read it as "....therefore, going forward we need to remove these funds from employers and the too-dumb-to-know-what-to-do-with-their-retirement-money-sheeple" and let the Goverment manage it for them."


Remember, WAPO and the NY Times are ALWAYS looking out for the little guy


Tue, 01/15/2013 - 16:32 | 3155184 Joe Davola
Joe Davola's picture

Of course, there is no overhead in government management.

Tue, 01/15/2013 - 17:22 | 3155459 s2man
s2man's picture

I don't think they'll take the retirement funds, that would just hurt the bottom line of their banker friends.  I predict, when the bond bubble bursts, they will just declare all retirement accounts must be invested in gov. bonds.  (to be paid back with then worthless FRN's, of course)

Tue, 01/15/2013 - 16:30 | 3155172 AldoHux_IV
AldoHux_IV's picture

Not only is this illustrative of how the system is incorrectly built-- meaning relying upon a false assumption that equities gain translates into a win-win situation for all (as recent gains only prove that it serves a select few and destroys democracy along the way), but that the so-called wealth effect is meaningless when cost of living is untenable.

Also, the retirement funds (institutional or small) have always been the reason to pursue such dubious policy (from deregulation to derivatives) that it's no wonder it's been the whale carcass for these parasites to feed off as they gorge more and more wealth from the masses. Retirement funds are no different from a ponzi-- it doesn't work.

Tue, 01/15/2013 - 16:31 | 3155174 G_T_A_44
G_T_A_44's picture

The 28% figure appears light. More to the tune of 35-40%.

Tue, 01/15/2013 - 16:30 | 3155176 TrumpXVI
TrumpXVI's picture

What's wrong with all you people here?

We need to TRUST our leaders, I mean, our masters.

Tue, 01/15/2013 - 16:31 | 3155180 F. Bastiat
F. Bastiat's picture

The other reason is to get the funds out before the despot's regime raids them.

Folks tend to forget that the primary weapon of coercion, wielded by the central government against the people and the several states, is financial coercion.

Tue, 01/15/2013 - 16:42 | 3155234 Jonas Parker
Jonas Parker's picture


Tue, 01/15/2013 - 16:32 | 3155181 mac_daddy
mac_daddy's picture

I took everthing out, in the form of a loan, in case SHTF I have worthless cash on hand, better me than them. I get it a 4.25% so that's not much for piece of mind.

Tue, 01/15/2013 - 16:31 | 3155183 A. Magnus
A. Magnus's picture

Even though Keynes was a Redcoat it must be the fault of the Joos! Cass Sunstein says so, and he pays trolls to promote this hare-brained meme on this site so people think ANYONE who disagrees with the bankers is a card carrying Klansman...

Tue, 01/15/2013 - 16:33 | 3155187 NRGIsFree
NRGIsFree's picture

And the stock market goes up. Almost as if manipulated.

Tue, 01/15/2013 - 16:34 | 3155189 Dre4dwolf
Dre4dwolf's picture

no one in my generation I know that is working has a retirement plan, and none of them want one.


My generation (20~ 30) would rather just take our money, and stuff it under the mattress/into gold or silver (because it doesn't do a corzine evaporation trick over-night).


Even if my silver holdings went to 2$ an OZ I would STILL hold onto it and buy more, because I know that somewhere in the future, the central bank will print.... if they replace the currency my silver is still there, it will always buy the same gallons of gas, the same amount of food more or less within 5% gain or loss.


My money on the other hand? paper? I spend that as fast as possible to maximize the value usage.... (you don't get anything for saving and in-fact you are punished) so why save dollars?


My entire generation is thinking/has started thinking like this... because we have an inherent dis-trust of the older generations (we know you are all trying to consume us today and leave us with debts unpayable).... it's not really  your fault though, you guys didn't have the social media available to make sound decisions.... and the dinosaur media kinda had you guys by the balls (telling you what to buy, where to work, how to work, how much you should earn) etc.... you guys had no control over your own lives and you all got taken advantage of.




Tue, 01/15/2013 - 16:40 | 3155231 NotApplicable
NotApplicable's picture

Well, minus all of the Hopium addicts who plan for their retirement by voting.

Tue, 01/15/2013 - 17:14 | 3155431 MachoMan
MachoMan's picture

While slightly older than you, I concur...  although, many young professionals are jumping into the trap because they know no better and largely feel secure at the moment, the tide is turning as inflation eats away their paychecks...  I withdrew the last of my account early last year...  but yes, I think most folks just opt to receive that money now...  whether or not it is a conscious decision because they are worried about the sanctity of their money or whether it's a symptom of increased costs with stagnant wages is up for debate, but the effect is the same.

Tue, 01/15/2013 - 17:36 | 3155519 chubbar
chubbar's picture

Good plan! PS, buy canadian maples, they have a face value of $5 Canadian dollars. You never have to worry about silver at $2/ounce (not that you'll EVER see that). Good luck!

Tue, 01/15/2013 - 18:02 | 3155607 Iam_Silverman
Iam_Silverman's picture

"You never have to worry about silver at $2/ounce (not that you'll EVER see that)."

Unless, of course, it is being sold by Amazon.  Then, those negative margins (remember, it costs $5/oz. to dig up) can be beat purely through volume - and free shipping on 13 ounces or more!

Tue, 01/15/2013 - 18:18 | 3155661 hooligan2009
hooligan2009's picture

young spartacus!! bravo...

Tue, 01/15/2013 - 18:41 | 3155753 Cathartes Aura
Cathartes Aura's picture

@ Dre4dwolf,

because we have an inherent dis-trust of the older generations (we know you are all trying to consume us today and leave us with debts unpayable).... it's not really  your fault though, you guys didn't have the social media available to make sound decisions.... and the dinosaur media kinda had you guys by the balls (telling you what to buy, where to work, how to work, how much you should earn) etc.... you guys had no control over your own lives and you all got taken advantage of.

don't make the mistake of believing every one in any "generation" acts in unison - all "ages" have people who pay attention, realise the gov has a system to exploit the individual, etc. - and lots of folks opt out of that system very early, even if it means being left out of the "social media" networks, they have their OWN well-considered/trusted networks that predate the internet-created-just-4-U pages. . .

not everyone utilises the dinosaur me-duh, the majority of people I know haven't had a TV in decades, and are selective about where they spend their internet time. . .and some exercised responsibility & control over their lives while the majority were being taken advantage of.

Tue, 01/15/2013 - 23:13 | 3156489 Jugdish
Jugdish's picture

Amen brother. Hit the nail on the head. +1

Tue, 01/15/2013 - 16:33 | 3155193 Shizzmoney
Shizzmoney's picture

Let’s not forget that many employers automatically put people into these 401k plans without even asking them.

Two funny 401K stories:

A) When I leave a job in 2006 when I was 24, the HR woman goes through the motions on the exit interview.  Then she gets to my 401K......when I didn't even know i was enrolled in, with ING (I had about 5K in there at the time; the company matched my contribution.  This is going extinct).

B) I get new job, get laid off in 2008.  After not finding a job for the longest time, I decide (actually, focred to since I was broke) to take out my 401k.  After taxes, I get 3.5K (lol), take it to AC and run it up to 15K over the course of a weekend, playing poker.

I'm never doing 401Ks again.  When (or more like IF) I get capital to invest in my future - I will buy Gold/Silver. 

I actually had to call Wells Fargo at my new employer and spend 20 minutes on hold, just to unenroll in my new companies' 401k (AND, this company doesn't match contributions....what's the point?).

Tue, 01/15/2013 - 16:34 | 3155194 Encroaching Darkness
Encroaching Darkness's picture

On the one hand, this is sad; being forced to forgo retirement dreams to stay alive today is a painful choice.

On the other hand, Obama will likely try to force 401k's and IRAs to invest in government bonds, see: Theresa Ghilarducci, the nastiest socialist in the labor / treasury nexus. If you take loans against a 401k that the government is planning to seize anyway (or force to take a loss investing in worthless government bonds / Treasuries, essentially the same thing) then why not spend it before they can seize it?

Build retirement funds overseas, as long as it is still legal; buy land, properties, whatever D.C can't steal without an invasion. Then, go live their and build your future.

The government of "wherever you go" may still seize it, but there are risks in life, and theft by D.C. is a given.

Tue, 01/15/2013 - 16:43 | 3155243 NotApplicable
NotApplicable's picture

Anybody planning their retirement dreams around a 401k is going to discover it's actually a nightmare.

Tue, 01/15/2013 - 16:41 | 3155197 Id fight Gandhi
Id fight Gandhi's picture

We talk about the student loan bubble all the time. You want a scary thought? Long term care, nursing home costs into the next few decades. Medicare footing bills on this stuff.

Retirement is 'sold' as some dream period of your life, where the slivers of savings culminate to some magical jackpot to fund a laid back lifestyle of golf, world vacations and soaking in a bathtub popping viagras.

People ain't planning for the reality of illness, cancers and drooling in a corner of a nursing home.

Just ain't gonna happen.

Tue, 01/15/2013 - 19:30 | 3155657 hooligan2009
hooligan2009's picture

you are exactly right on...your pension pot in your 401k only pays 100 bucks a week for every 100,000 you have want 500 a week, save 500,000 (that's using a 5% annuity rate, so 5,000 a year, 100 a week).

your retriement home costs are going to be c. 2,000 a if your house is worth less than 300,000 when you retire and you plan on spending 3 years in a retirement/care/shady past your eyes are going to be doing a little begging from the relatives who didn't want to look after you in the first place

Tue, 01/15/2013 - 20:02 | 3155980 CoolBeans
CoolBeans's picture

Pimp out a big fat RV bus ---there's your retirement house.

Tue, 01/15/2013 - 19:59 | 3155973 CoolBeans
CoolBeans's picture

Many aren't planning today -- because they simply can't.  It's all they can do to put food on the table, keep a roof overhead and shoes on the kids.  It is nuts out there....I'm scared that you and I could just as easily trade places w/some of these folks if it all heads south.  More south...

Tue, 01/15/2013 - 20:26 | 3156040 August
August's picture


"Many aren't planning today -- because they simply can't."

Well and simply put.  My only plan was to close out all my retirement plans, and remove the assets from the USA.  No jurisdiction can really be considered "secure", but I'd look upon the USA's "markets" as the last place in the so-called first world that I'd care to invest.

Tue, 01/15/2013 - 20:28 | 3156045 Hohum
Hohum's picture

It's actually Medicaid for long term care/nursing home care, but your point is well taken.

Tue, 01/15/2013 - 16:36 | 3155207 Frank N. Beans
Frank N. Beans's picture


What 401K?!

Tue, 01/15/2013 - 16:53 | 3155216 Kreditanstalt
Kreditanstalt's picture

What's an "employer"?

Tue, 01/15/2013 - 16:38 | 3155219 A Lunatic
A Lunatic's picture

Transparency: No jobs, No money, No hope, No freedom........keep the change.

Tue, 01/15/2013 - 16:39 | 3155224 booboo
booboo's picture

and 100% of government workers are raiding my families retirement plan.

Tue, 01/15/2013 - 16:39 | 3155225 CoolBeans
CoolBeans's picture

No surprise at all -- I'll bet $$ withdrawals are being processed at an alarming rate. I'm tempted to do the same.

I am deeply concerned about the huge number of people struggling to keep the kids fed and the lights on, much less a roof over everyone's head. The numbers of people impacted are growing exponentially each month.

Those not yet impacted? They are seriously SCARED.

We are seeing a multi-whammy effect at least in our area...and its impacting families and businesses from MANY ANGLES: Economy, plus certain industries getting killed by environmental issues (example: No oysters in Apalachicola - total disaster for that industry), drought impact on food prices), the increased regulations that suck the life out of businesses, etc., etc.

There is no light at the end of this swirling downward tunnel.

Tue, 01/15/2013 - 16:45 | 3155257 NotApplicable
NotApplicable's picture

Meanwhile, local governments are creating new programs to respond to the crisis. First order of business? Why federal funding for the program, of course!


Tue, 01/15/2013 - 17:21 | 3155455 CoolBeans
CoolBeans's picture

You got that right and they waste no time.

So, the financial industry put my business in a precarious position - where's my firm's bailout? Oh yeah, never mind. I'm just a lowly small business person and not even a blip on anyone's radar.

Tue, 01/15/2013 - 16:43 | 3155238 TahoeBilly2012
TahoeBilly2012's picture

When the lights go out... I wonder what my brainwashy Obammy voter friends will say then...there will be some new spin and they will claim he is the "right guy" for the new crisis. Jon Stewart (Leibewitz) will keep them laughing all the way to starvation.

Tue, 01/15/2013 - 16:57 | 3155327 Shizzmoney
Shizzmoney's picture

I give Stewart (Leibewitz) credit today; he took on Paul Krugman for his bullshit.

Cue the side-by-side photos of the two men: “If somebody is ruining their brand with a trillion-dollar coin idea, I don’t think it’s the non-economist,” Stewart said.

He did admit that “there are always counter-arguments and nuances of language and thought which can be cited as evidence of this show’s inherent unfairness or ignorance.”

Still, said Stewart, “my ignorant conclusion is that minting a trillion-dollar coin to allow the president to circumvent the debt ceiling, no matter how artibrary that may be, is a stupid fucking idea.”

Sadly, Stewart's comedy provides more honesty than most MSM "news" today.  Sadly, his "jokes" however, are trolling us all as the country slowly crumbles into mush.


Wed, 01/16/2013 - 09:25 | 3157137 Clashfan
Clashfan's picture

That horrible clown mocked 911 truth activists. I'll never support anything he does.

Tue, 01/15/2013 - 16:43 | 3155240 Tsar Pointless
Tsar Pointless's picture

And they're using the money to buy stocks starting every day around 11:30 am.

Tue, 01/15/2013 - 16:49 | 3155274 kralizec
kralizec's picture

Fuckin' - A!  I pulled out of the Kabuki Casino, screw paper pushing punks!

Tue, 01/15/2013 - 16:49 | 3155275 optimator
optimator's picture

And a good time to take those free Bernie Bucks before he takes them away.

Tue, 01/15/2013 - 16:52 | 3155308 Shizzmoney
Shizzmoney's picture

401Ks are held by Wall Street.  That's why all of these Baby Boomers go into a panic when the banks crashed in 2008.  The "bunny" that Hank Paulson held the gun to, was their 401Ks.  

Unless you can actually touch your money - it ain't your money.  Hell, it's not even money; it's just 1's and 0's on a spreadsheet.

Tue, 01/15/2013 - 18:04 | 3155611 Supernova Born
Supernova Born's picture

401k's were created by Wall St lobbyists and were meant to add another far broader base to the Ponzi. Of course, you have to let a few cash out successfully in the early days of withdrawals to get the rest to stay "in the game" [Cramer] until they are ripe for the plucking.

Tue, 01/15/2013 - 16:56 | 3155326 Alcoholic Nativ...
Alcoholic Native American's picture

As a 28 year old, wtf is a 401k plan?

Tue, 01/15/2013 - 16:57 | 3155338 Shizzmoney
Shizzmoney's picture

A midget gang rape, with lube

Tue, 01/15/2013 - 17:16 | 3155437 VelvetHog
VelvetHog's picture

A dwarf gang rape without lube.  (fixed)

Tue, 01/15/2013 - 18:11 | 3155643 hooligan2009
hooligan2009's picture

ffs..stop! heh...its a savings plan, where you don't pay tax on contributions..or tax on investment earnings, and provides a pension..

of course you have to pay all those nice investment managers, custodians, brokers, bankers, fx traders their cut..but thats only around 3% a year when your investment returns should be use the 401k, pay wall street 37.5% of everything you make and thank God you are an american!

Tue, 01/15/2013 - 18:31 | 3155699 DosZap
DosZap's picture

ffs..stop! heh...its a savings plan, where you don't pay tax on contributions..or tax on investment earnings, and provides a pension..

Not if they start Pre Taxing you on it, and your employers constribution of ANY.

They have already floated the idea,and when it's an idea,it sooner or later hatches.

Tue, 01/15/2013 - 18:42 | 3155758 hooligan2009
hooligan2009's picture


Tue, 01/15/2013 - 18:37 | 3155727 SmittyinLA
SmittyinLA's picture

401k is bait 

Tue, 01/15/2013 - 16:56 | 3155328 10PastMidnight
10PastMidnight's picture

Fear not, the BLS doesn't figure 401 raiding into inflation you know because once you're there, hambuger will seem like steak.

Tue, 01/15/2013 - 16:57 | 3155330 Never One Roach
Never One Roach's picture

But...but...but they said on MSM just this morning, "Housing prcies soaring....retail sales strong...'Never been a Better Time' shootz,...plenty of hiring...."


Oh my.

Tue, 01/15/2013 - 17:00 | 3155363 10PastMidnight
10PastMidnight's picture

You're correct, hope and change is now synonomous with GTFO you're broke.

Do NOT follow this link or you will be banned from the site!