In spite of the alleged recovery, in spite of falling unemployment numbers, and in spite of a stock market boom, Wells Fargo 401(k) Loans Jump 28% as Older Workers Borrow.
The number of people taking loans from their 401(k) retirement accounts increased 28 percent in the fourth quarter from a year earlier as older workers tapped their savings, according to Wells Fargo (WFC) & Co.
The number is based on 1.9 million survey participants who have 401(k)s administered by the company, of which 34,987, or about 1.8 percent, took out loans, the San Francisco-based bank said today in a statement. The average new loan balance rose 7 percent to $7,126.
“The increased loan activity particularly among older participants is concerning because those are the years when workers can start to make ‘catch-up’ contributions and really need to focus on preparing for retirement,” Laurie Nordquist, director of Wells Fargo Retirement, said in the statement. “This age is also the ‘sandwich’ generation, caught between paying for their kids’ education and supporting elderly parents.”
Reflections on the Economy
401K borrowing provides more evidence the economy is not as good as presented and that people are struggling in their jobs, much closer to the edge of oblivion than the Fed or Obama wants to admit.
The borrowing surge happened in the 4th quarter, before the increase in payroll taxes this year, so expect matters to get worse. And if for any reason those 401K borrowers lose their jobs, they are going to be in deep trouble tax-wise.
Mike “Mish” Shedlock