Most Workers Over 50 Are Tapping Retirement Savings Early — Here's the Risk
Although workers in their 50s are nearing traditional retirement age, many feel underprepared.
A new LiveCareer survey of U.S. workers ages 50 and older found that nearly half (49%) are worried about outliving their retirement funds. Yet, at the same time, a large portion are taking early withdrawals from retirement savings accounts — the survey found that 61% are regularly withdrawing from their retirement accounts and an additional 30% dip into savings occasionally to cover specific expenses.
Here's why early withdrawals are becoming so common, plus the long-term consequences of doing so.
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Many US Workers Over 50 Can't Cover Rising Living Costs
"A major driver behind early withdrawals is the growing gap between what people earn and what it actually costs to live," said Jasmine Escalera, career expert at LiveCareer.
A recent MyPerfectResume report found that wages rose 18% nationally between 2020 and 2024, yet purchasing power declined by 2.6% when adjusted for cost of living.
"This means that employees may be earning more on paper, but are effectively experiencing a pay cut in terms of how far their income goes," Escalera said. "That financial strain is showing up in very tangible ways, especially for older workers."
She sees the fact that so many older workers are taking withdrawals from their retirement accounts to cover everyday expenses as a systemic issue rather than an individual one.
"This points to a broader affordability issue, not a financial planning failure," Escalera said. "When the cost of essentials like housing, healthcare and food continues to rise, retirement savings often become a necessary safety net."
How Early Retirement Withdrawals Can Shrink Long‑Term Savings
Withdrawing from retirement accounts early can create a ripple effect.
"It not only reduces the amount available for the future, but also limits long-term growth and, in some cases, introduces penalties or fees that further impact savings," Escalera said. "Therefore, the decision to withdraw from retirement savings shouldn’t be taken lightly and it’s important to understand the full impact."
She recommends consulting with a financial professional before deciding to make an early withdrawal.
"Speaking with a financial planner or advisor can help professionals weigh their options and make informed choices that balance immediate needs with long-term financial security," Escalera said.
Ways Older Workers Can Cover Expenses Without Draining Retirement
Taking early retirement withdrawals should be a last resort. First, older workers should look for ways to increase their income.
"Older workers often have highly valuable, in-demand skill sets that are sometimes overlooked, including diverse experience, leadership and the ability to mentor or consult," Escalera said. "One alternative to tapping into retirement savings is identifying ways to leverage those skills for additional income, whether through consulting, part-time work or project-based opportunities."
They might also seek out a pay increase at their current job.
"It is important for older professionals to recognize the value they are already bringing within their current roles," Escalera said. "Many are contributing at a level that goes beyond their job description and that can serve as a strong foundation for conversations around increasing their compensation."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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