Ted Cruz Says 401(k) Hardship Withdrawals Hit a Record. Here’s What One Really Costs

Detailed summary

Vanguard says a record 6% of 401(k) savers took hardship withdrawals in 2025, up from 1.7% in 2020, a figure Sen. Ted Cruz cited this week. To net $10,000, a 52-year-old in the…

Sen. Ted Cruz used his podcast this week to point at a number most people never see: the share of workers pulling money out of their 401(k) early because they have no other choice. Cruz said a record 6% of 401(k) holders took hardship withdrawals in 2025.

The figure matches Vanguard's How America Saves 2026 report. Among the roughly 5 million workers in the 401(k) plans Vanguard runs, 6% took at least one hardship withdrawal last year. That was the sixth straight annual increase, up from 1.7% in 2020, or about 3.5 times as many.

A hardship withdrawal looks like a way out. For many savers it is the most expensive money they will ever touch. Here is what one costs, and the cheaper options to check first.

Vanguard tracks the reason given for each withdrawal. The most common were:

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