More Americans are raiding their retirement accounts as the cost of living climbs, and experts predict that the number of workers drawing on their 401(k)s to pay for financial emergencies may increase due to a confluence of factors, like new provisions that make withdrawals easier and high inflation that is straining household budgets.

“It’s just more expensive to live these days, and that’s what’s putting the pinch on participants,” said Craig Reid, national retirement practice leader at Marsh McLennan Agency, a workplace benefits company. “Some of it is still spillover from the Covid pandemic. A lot of it is inflation — just the grind of daily life.”

Mark Scharf, an information technology worker in New York City, has taken money out of retirement accounts three times since the 2008 recession. He withdrew more than $50,000 to pay credit card debts, tuition for his six children to attend a religious school and, most recently, an overdue mortgage.

“It was really a choice of saving the present versus securing the future,” he said. “My situation wasn’t someone who’s frivolous. Expenses were just more than I was making.”

Now working in the public sector and paying into a pension, Mr. Scharf, 55, calculates that if he retires at 70, he can draw 40 percent of his former salary. As much as his retirement accounts have functioned as circuit breakers to reset his debts, he’s relieved that he doesn’t have the option of withdrawing his pension contributions.

“I don’t want to have to do that anymore, so I’m forcing myself not to,” he said.

Mr. Scharf has plenty of company, especially recently. Two large retirement plan administrators, Fidelity and Vanguard, have observed increases in hardship withdrawals, which may be taken only if there is “an immediate and heavy financial need,” according to the Internal Revenue Service. Fidelity found that 2.4 percent of 22 million people with retirement accounts in its system took hardship withdrawals in the final quarter of 2022, up half a percentage point from a year earlier. A similar analysis by Vanguard found that 2.8 percent of five million people with retirement accounts made a hardship withdrawal last year, up from 2.1 percent a year earlier.

In the first three months of 2023, Bank of America found that the number of people taking hardship withdrawals jumped 33 percent from the same period a year earlier, with workers taking out an average of $5,100 each.

“Customers are much more aware that their retirement accounts are not sacrosanct,” said Steve Parrish, adjunct professor and co-director of the Center for Retirement Income at the American College of Financial Services. “The trend has already started. People are realizing their 401(k)s aren’t locked until they’re 60.”

Some experts warn that this could be just the tip of the iceberg, pointing to the many American families struggling with higher costs. Although the personal savings rate hit a high of nearly 34 percent in April 2020 because of Covid lockdowns and stimulus payments, it has since fallen to about 5 percent, according to the U.S. Bureau of Economic Analysis.

“What this uptick in hardship withdrawals overall signals is, across the board, people don’t have enough short-term savings,” said Kirsten Hunter Peterson, vice president of thought leadership for workplace investing at Fidelity. “When that inevitable unexpected expense comes up, people might have to look to their retirement account,” she said.

What’s more, people often have to withdraw more money than the amount they need in order to cover federal income tax and a 10 percent early-withdrawal penalty if they don’t qualify for a waiver. Waivers can be granted for a limited number of circumstances, such as death or permanent disability.

“The cost of living is definitely tipping clients over the edge at this point,” said Sarah Honsinger, a credit counselor at Apprisen, a nonprofit debt management organization.

Ms. Honsinger added that the CARES Act, which temporarily relaxed restrictions around hardship withdrawals in 2020, triggered an increase in withdrawals from retirement accounts.

Lawrence Delva-Gonzalez, who runs a personal finance blog called the Neighborhood Finance Guy, said he observed people in the Haitian American community of Miami, his hometown, turning to their nest eggs during the worst of Covid without a clear view of the long-term repercussions.

“When it came to the pandemic and word got out that you could take out the money early without penalty, they did,” he said.

Mr. Delva-Gonzalez said he worried that a lack of financial literacy imperiled marginalized workers like them. “My community has almost no access to it,” he said.

With their retirement money gone, these workers face a bleak future.

“People who are pushing 64, 65 have basically run out of options,” he said. “They don’t have any savings and they have debt going into retirement.”

Mr. Delva-Gonzalez, 40, said the repercussions may spill over into the next generation, pointing to his own family as an example.

“Me and my wife, we already know we’re probably going to be the people to support my mom, and her mom and her dad,” he said, an expense he estimated would cost several thousand dollars a month. “It’s only so much you can do before you start cutting into your own retirement and your own lifestyle and your ability to start a family.”

Greater access to plans, and to money

The Secure 2.0 Act, passed by Congress last year, aims to increase workers’ access to retirement benefits, primarily by making it easier for businesses to offer 401(k) plans. It also cuts down on the amount of red tape workers face when taking money out of a retirement account, and expands the list of circumstances for waiving the 10 percent penalty assessed on money withdrawn if the owner is 59½ or younger.

Retirement experts see the legislation as a double-edged sword.

“It’s wonderful to see Congress do something to get more employers to offer qualified plans,” said Mr. Parrish of the American College of Financial Services. “It’s concerning on the consumer side that it’s going to be maybe a little too easy to get to. Great, you can get at your money — but you only retire once.”

Taking money out of a retirement account has an outsize effect on a person’s future financial security, because those funds are no longer invested and earning returns that compound. Even people who consider themselves financially savvy admit that fully grasping the effect on a nest egg can be hard when retirement is decades away.

A common piece of advice to 401(k) owners thinking of pulling out money is to take out a loan against the account instead. But as Ashley Patrick discovered, even those loans can backfire. A decade ago, she and her husband borrowed $24,000 from his 401(k) to renovate their home near Charlotte, N.C., but their repayment plans were derailed when he was laid off.

Borrowers get a five-year repayment term — provided they remain with their employer. But if they lose or quit their job, the borrower has to pay back the loan by the next year’s tax filing deadline. If they miss that deadline, the I.R.S. treats the distribution as a withdrawal and applies taxes and penalties.

“We didn’t have the money,” said Ms. Patrick, 38. “It was already spent.”

The next April, the couple faced a $6,000 tax bill. But the bigger loss was in the missed opportunity to keep that money invested, Ms. Patrick said.

“We were in our 20s when we did this, so it would have had a very long time to grow and have that compound,” she said. “I didn’t think about the long-term cost until I started learning more about finances.”

The 401(k) as a substitute for savings

Retirement planning experts say that one reason there are more withdrawals today is that more workers have 401(k)s, including lower-income and historically disadvantaged workers, who are more likely to rely on retirement savings as an emergency fund.

“The uptick that we have observed highlights and underscores the importance of an emergency savings account as a first line of defense,” said Fiona Greig, global head of investor research and policy at Vanguard. “Historically, we’ve shown that those who take out hardship withdrawals tend to be lower-income workers.”

Ms. Greig said one reason people dip into their retirement savings is to stave off eviction or foreclosure. “I’m starting to wonder whether there’s more distress emerging with lower-income households,” she said.

Low-earning workers are especially in need of the financial security offered by a 401(k) in retirement because they collect lower Social Security benefits and are more likely to hold physically strenuous jobs that become harder to perform with age.

One possible solution, some experts say, is letting employers establish emergency savings accounts for employees that are linked to their 401(k) accounts. The Secure 2.0 Act includes a provision that would let retirement plan sponsors set up these so-called sidecar accounts beginning in 2024. Workers could contribute after-tax earnings a little bit at a time, up to a maximum of $2,500, and those funds could be withdrawn without triggering a penalty.

Sid Pailla, chief executive of the Sunny Day Fund, a financial technology company that helps workers establish emergency funds, said this change would be a boon to low-income workers who might otherwise pull emergency funds out of their 401(k).

Mr. Pailla, 35, said he could relate to that kind of financial stress.

“My experience with it came fairly early on with my life in America,” he said.

Not long after his family immigrated from India, Mr. Pailla vividly recalled, he guided his parents, who spoke little English, through the byzantine process of taking an early 401(k) withdrawal when both lost their jobs after the 1990s dot-com crash.

“I was about 12 years old,” he said. “I was definitely scarred by it.”