This is the No. 1 reason Americans are withdrawing from their savings (2024)

FAQs

Why are people withdrawing their savings? ›

For a growing number of Americans, retirement accounts are doing double duty savings for the future when they're no longer working and as a source for emergency funds for the here and now when they feel a cash crunch. In many ways, it's a reflection of the dueling forces in the US economy.

Americans saw their coffers swell thanks to pandemic-related stimulus and not spending during shutdowns. The robust job market of recent years has also supported household finances. Put together, this may have resulted in “a structurally lower saving rate,” according to the report.

The Fed's Regulation D defined savings deposits, in part, as those limited to six convenient withdrawals monthly. This prevented banks from classifying transactions accounts as savings deposits in order to potentially lower the amount of reserves they were required to keep on deposit with the Fed.

Savings accounts may have monthly transaction limits per federal rule Regulation D, which stated that banks must penalize consumers for withdrawing from savings more than six times per month.

A bank run occurs when a large group of depositors withdraw their money from banks at the same time. Customers in bank runs typically withdraw money based on fears that the institution will become insolvent. With more people withdrawing money, banks will use up their cash reserves and can end up in default.

Thousands of banks failed during the Depression and loss of confidence caused anxious depositors to create "runs" on banks as they tried to withdraw their money before the banks collapsed.

Why Americans are prone to 'financial fragility' Almost two-thirds of respondents, 63%, say high inflation has left less room to save for emergencies. Meanwhile, just 19% say they are saving more because of high interest rates.

Two economists at the San Francisco Federal Reserve found that by August of 2021, Americans built up over $2 trillion in savings — above and beyond what they would have saved had there been no pandemic. This week, they reported that we've finally exhausted that savings surplus.

In a recent nationwide survey of working age Americans, 79% agree that the nation faces a retirement savings crisis, up from 67% in 2020. And more than half of Americans (55%) are concerned that they cannot achieve financial security in retirement.

The amount of cash you can withdraw from a bank in a single day will depend on the bank's cash withdrawal policy. Your bank may allow you to withdraw $5,000, $10,000 or even $20,000 in cash per day. Or your daily cash withdrawal limits may be well below these amounts.

Can I withdraw $50,000 from a bank? ›

Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like.

About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.

Once your CD matures, you'll have access to the amount you deposited as well as the interest you've earned. One big difference between a CD and a traditional savings account is that you cannot touch the money in a CD during the term.

For a standard depository account, there are no laws or legal limits to how much cash you can withdraw. Withdrawal limits are set by the banks themselves and differ across institutions. That said, cash withdrawals are subject to the same reporting limits as all transactions.

In general, most savings accounts in recent years have paid under 2.00%, and many still do. Because savings accounts typically don't provide a very generous return on investment, it's really difficult to get rich just by sticking your money in savings.

According to Vanguard, a record-high 3.6 percent of workers took hardship distributions from their 401ks in 2023. But it comes at a cost. If someone takes money out of their 401k before they are 59 and a half years old, they must be prepared to pay the heavy taxes and a 10 percent penalty for withdrawing early.

Typically, yes — your money is yours. But a savings account is designed to discourage frequent transactional use and may carry monthly withdrawal limits. Exceeding these limits can incur fees, have your account re-classified or have it closed altogether.

Although each financial situation is unique, it doesn't typically make sense for you to keep all of your money in a high-yield savings account. After all, most high-yield savings accounts limit withdrawals to only six per month, so a checking account is typically a better place to store your spending cash.

Should I take my money out of the bank? You should only take your money out of the bank if you need the cash. In the bank, cash is less vulnerable to theft, loss and disaster. And depending on the bank account, you could be earning interest on your cash that you won't be earning if it stays under your mattress.