13% of 401(k) Participants Borrowed Against Their Plans in 2021 -- Here's Why That's a Dangerous Move
When a need for money arises, you have options. You can go out and apply for a loan or try tapping the assets you already have. For homeowners, that can mean taking out a home equity loan or line of credit. For retirement savers, it can mean taking out a loan against a 401(k) plan.
In 2021, 13% of 401(k) plan participants had a loan outstanding, reports Vanguard. And the average loan amount was about $10,600. While borrowing against your 401(k) might seem like a reasonable move, it's one that could easily backfire.
It's easy to see why 401(k) plan participants are drawn to borrow against their accounts. When you pay back that loan, you're repaying yourself, as opposed to a bank or lending institution. But 401(k) loans can be dangerous, so it's a good idea to explore other options before moving forward with one.
Source Fool.com
