The findings highlight the need for new ways to encourage people to save for unplanned financial jolts, said Alison Shelton, a senior research officer with Pew’s retirement savings project, who discussed the report in a call with journalists. “There’s a need to help people save for the short term,” she said.
The report is based on a new analysis of data from Pew’s Survey of American Family Finances, focusing on Americans ages 20 to 58 who were not retired and did not have a retired spouse. (The survey, a representative sample of more than 5,600 households, was conducted in two waves, in 2014 and 2015.)
The ability to use retirement funds prematurely can help people weather cash shortfalls and perhaps avoid cascading financial problems. But, Ms. Shelton said, it can also permanently lower retirement savings, because it’s hard to catch back up.
