Working-age Americans are tapping into retirement nest eggs to pay for everyday expenses, according to recent data from Fidelity Investments. Consequently, many are falling short in their retirement goals.

Fidelity’s quarterly analysis examined the savings behaviors and account balances for more than 45 million IRA, 401(k) and 403(b) retirement accounts.

According to the data, “account balances have decreased slightly since [third] quarter, while withdrawals and loans are inching up, showing the impact economic events such as inflation and market volatility can have on Americans‘ wallets — and ultimately their retirement savings.” 

Fidelity noted that in the third quarter, 2.8% of the firm’s retirement account participants took loans from their 401(k)s. That level is unchanged from the previous quarter but is up from 2.4% in the third quarter of 2022.

The data show that the percentage of workers with loans outstanding has increased slightly to 17.6%, up from 17.2% last quarter and 16.8% in the third quarter of last year.

“Loans taken against 401(k) savings generally must be paid back over as long as five years with interest. However, some workers have been taking what’s known as an in-service withdrawal,” Bloomberg reported

Depending on an employer’s plan guidelines, some workers are able to choose in-service withdrawals rather than loans. The borrower is assessed taxes and penalties but does not have to repay the amount withdrawn.

In the third quarter of this year, 3.2% of Fidelity’s retirement plan participants took an in-service withdrawal. That’s up from 2.7% from a year ago. 

A previous study by Allianz Life Insurance Co. of North America noted that Americans are facing a “new retirement reality” that undermines retirement planning, as they face economic challenges such as inflation, market volatility, financial crises and fears of bank failures.