Layoffs dominated the headlines in 2025 — employers announced more than 1.2 million job cuts, the highest annual total since the pandemic. In these cases, employers have a playbook for that moment, which may include severance, COBRA, and outplacement support.
But what about those who are actively employed — and barely getting by — regardless of income?
- 55% of workers can’t cover an unexpected $500 expense out of savings, according to June 2026 SecureSave research.
- 41% skipped a necessary expense — medical care, food, or a car repair — in the past six months because they didn’t have the savings to cover it.
- 6% of 401(k) participants took a hardship withdrawal in 2025 — triple the pre-pandemic rate, according to Vanguard’s How America Saves 2026 report.
Every person in these numbers has a job and a paycheck coming in. Many are also enrolled in their workplace retirement plan, actively contributing, and some are also trying to build a workplace emergency savings account.
So why isn’t it working?
Not enough saved — and few alternatives
Nearly 7 in 10 households experience a significant unexpected expense each year, according to the Aspen Institute, and almost half face more than one.
Those events cost the median household $4,500 a year — on top of everything else an employee is already carrying: basic living expenses that keep climbing, credit card debt, student loan payments, and low credit scores that shut employees out of affordable borrowing options.
Even employees with emergency savings might be unable to cover the full amount without tapping into their retirement account — unless their financial wellness benefits cover the full scope of their financial challenges.
Hardship withdrawals are at a record high
Vanguard’s data shows that workers earning under $100,000 were about 3.5 times more likely to take a hardship withdrawal than higher earners. Roughly 7 in 10 of those lower-income withdrawals went toward avoiding eviction or foreclosure or covering medical bills.
For employers, this also brings compounding costs. Roughly one in ten 401(k) loans defaults — most often when an employee leaves — turning a temporary loan into permanent leakage.
Support has to arrive before the withdrawal
Employees need support addressing the reason they’re tapping into their retirement accounts — along with all of their other financial challenges — to turn the trend around.
Maybe it’s the payday loan or student loan payments eating up most of their cash each month. The bills coming in faster than paychecks, pushing them toward earned wage access fees that trap them in a cycle. The rent or car payment they’ve fallen behind on. The groceries they paid for with a Buy Now, Pay Later solution or credit card.
All of these challenges can be addressed with Financial Care — including support from a Brightside Financial Assistant. This is a real person on the employee’s side, who helps find free and low-cost solutions that keep retirement savings intact while addressing other sources of financial strain, one step at a time.
Brightside can also integrate with other benefits, including the employer’s retirement plan. When an employee requests a 401(k) loan or hardship withdrawal, Brightside can reach them in that moment and help them find better alternatives.
Andrew’s story
For Andrew (name changed for privacy), that moment came when bookings at his rental property dried up and he fell behind on bills. Facing large monthly loan and high-interest credit card payments, he thought he had no choice but to take money from his 401(k).
But when he contacted his retirement plan administrator to initiate the transaction, he was told that Brightside, his free employee benefit, could help him explore other solutions that he may want to consider before tapping into his retirement funds.
Once he spoke with his Brightside Financial Assistant, they looked for options together. He chose a Brightside partner’s debt management plan that cut the interest rates he’d been paying on his cards and loans by more than half, brought his past-due accounts current, and saved him over $228,000 in interest and fees.
His immediate challenges were addressed, his financial stress decreased, and he saved hundreds of thousands of dollars – all without touching his retirement savings.
Schedule a demo to see how Brightside Financial Care addresses financial emergencies at the root — before they reach the 401(k).