It’s not the generation you’d guess.
Here’s a trick question: What’s worse – dipping into your retirement savings or not saving for retirement at all?
For millions of Americans, the answer is: They’re both terrible. A new Bankrate report found 30 million Americans pulled money out of their retirement savings to spend now, while 21 million “aren’t saving for retirement at all.”
Shockingly, the worst offenders aren’t the youngest.
Millennials are responsible
Bankrate researchers couldn’t hide their incredulity when they wrote:
Surprisingly, millennials were the least likely to dip into their retirement funds prematurely (only 8 percent did so over the past 12 months). In fact, millennials are the most likely age group to note an improved overall financial situation over the past year (40 percent say they’re better off and just 11 percent say they’re doing worse).
Of course, if millennials are skewing the numbers positively, that means older generations – the ones closer to retirement – are skewing negatively.
For those between the ages of 50 and 64, 26 percent warn their “financial situation has deteriorated over the past year.” Amazingly, 17 percent of this age group took money from their retirement savings to pay for a financial emergency.
Bankrate’s chief financial analyst Greg McBride explains why this is a costly decision:
Using retirement savings to cover an emergency is a permanent setback to retirement planning, with the possibility of taxable distributions, early withdrawal penalties, loss of tax efficiency, and the inability to replace withdrawn funds in future years.
What makes an emergency?
While researchers didn’t ask what those emergencies were, Consolidated Credit president Gary Herman has some idea.
“The major financial emergencies we’ve seen here at Consolidated Credit in the past two decades include the cost of divorce and medical conditions,” Herman says. “There’s also damage to major purchases, such as a car that breaks down or a roof that’s leaking.”
While Herman has encouraged Americans to create an emergency fund for just such unforeseen problems – and has even offered five simple steps for doing so – he realizes that’s impossible if Americans are carrying too much debt.
“You can’t save for a rainy day when it’s already pouring on your head,” Herman says. “Your first priority is getting out of debt now.”
The quickest and most affordable way to do that is to call Consolidated Credit at and speak with a certified credit counselor for a free debt analysis. It costs nothing to learn about your options – but it could cost your Golden Years if you don’t call.