Americans Tapping Into 401(K) and Other Retirement Funds

American Consumer Credit Counseling is advising clients on how to avoid getting scammed

Boston, MA – July 15, 2020

The COVID-19 pandemic and related economic crisis are forcing Americans to borrow against their retirement funds, and confidence in the U.S. economy is further declining among those who have been hardest hit, according to a new poll by American Consumer Credit Counseling.

The ACCC Financial Health Index for the Second Quarter of 2020 found that 22 percent of respondents report they have borrowed from their 401(k) accounts or other retirement savings to help get through economic shutdowns and cope with the uncertainty that has enveloped the U.S. since March.

The worrying sign comes as the United States has become the global epicenter of COVID-19, with several states experiencing staggering increases in new cases and a nationwide death toll that has approached 140,000. For perspective: nearly 80 percent of those surveyed in the Q1 Financial Health Index Survey in March said they had been impacted by the COVID-19 shutdown. At that time, the total number of identified U.S. infections was just 140,000 – roughly equivalent to the number who have now died from the virus nationwide. Total U.S. infections today are at more than 3.5 million.

“What we see among some Americans is perhaps what many Americans fear most: having to place their long-term financial security at risk just to get through and survive what is happening today,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “We always advise clients to avoid borrowing against retirement funds unless they are faced with an absolute and total financial emergency. That more than 20 percent of people are doing just that is yet another measure of this pandemic’s severity of impact.”

ACCC’s June poll of 411 Americans – aged 25-65 with incomes of $100,000 or less – found that the number of respondents who report zero confidence in the U.S. economy rose from 16 percent in the March survey to 23 percent in the Q2 poll conducted in June. And close to 40 percent of those in the most recent survey say they have an unhealthy debt-to-income ratio.

The ACCC Financial Health Index poll has a margin of error of plus-or-minus 5 percent. (An infographic is attached below depicting select results.)

Some hopeful signs: The percentage of respondents who described their employment as “very stable” increased from 27 percent in the Q1 survey to 34 percent in the Q2 Financial Health Index. And those who reported being “very confident” about their continued employment six months from now increased 6.7 percent to more than a quarter of all respondents. Additionally, 35 percent of those surveyed are not confident they can reduce their total debt by 10 percent over the next six months. That’s a five percent decrease in that category from the Q1 survey.

The U.S. economy gained 2.5 million jobs in May as many states started to reopen around Memorial Day, and the unemployment rate fell from 14.7% to 13.3%. But some states have had to retrench and reverse course on specific reopening plans, including California and Texas, while infection rates in Florida and Arizona have skyrocketed. In the first week of April, 6.5 million people filed for unemployment. By the second week of June, 1.5 million people filed for unemployment. As of June 13, the total number of people collecting unemployment was 19.5 million, down from 25 million in early May.  Unemployed Americans have been receiving an extra $600 a week, but that is set to stop by the end of July, and the payments are to likely run out even earlier.

“The good news for those households that are feeling the most pain is that mortgage companies, credit card issuers, and other lenders continue to work with borrowers through forbearance and payment deferral,” Trumble said. “But our economy and way of life now face structural problems: from the continued closure of schools to uncertainty about safety on public transportation and the inability to reopen entire sectors safely. We will be dealing with this for a very long time.”

Financial counselors at ACCC continue to provide callers with budget counseling and assistance with creditors while providing further assistance through and the ACCC Talking Cents blog. Counselors are also directing clients to resources such as the section on financial preparedness, and the downloadable EFFAK (Emergency Financial First Aid Kit) guide.

About American Consumer Credit Counseling

American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt management, bankruptcy counseling, housing counseling, student loan counseling, and financial education concerning debt solutions. To help consumers reach their goal of debt relief, ACCC provides a range of free consumer personal finance resources on a variety of topics including budgeting, credit and debt management, student loan assistance, youth and money, homeownership, identity theft, senior living, and retirement. Consumers can use ACCC’s worksheets, videos, calculators, and blog articles to make the best possible decisions regarding their financial future. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). For more information or to access free financial education resources, log on to or visit