The evidence of economic stress across the U.S. continues to build -- and the areas of our lives affected keep getting broader. Many economic problems work as part of vicious cycles: The mortgage crisis fed into unemployment, and job losses are feeding back into the high foreclosure rates. The 2008 stock market crash fed fears that investments were unreliable, which has kept investors from relying on the recent stabilization in stocks to bump up hiring and access to credit.

The number of workers borrowing from their Fidelity retirement accounts is apparently at a 10-year high. Fidelity administers 17,000 401(k)-style retirement investment plans with 11 million participants. According to Fidelity, 62,000 plan participants applied for hardship withdrawals from their plans in the second quarter, compared to only 45,000 a year ago.

Even more surprising, 45 percent of those who asked for hardship withdrawals last year took a second one this year.

Fidelity says that the average age of workers seeking hardship withdrawals is between 35 and 55 -- which are most people's peak earning years.

A hardship 401(k) withdrawal is a loan. For those under 59 1/2, an early withdrawal will cause them to incur tax liability plus pay a ten percent penalty, which can essentially destroy the value of a lifetime's investment increases.

In order even to eligible for this expensive withdrawal from a 401(k) plan, the IRS requires you to demonstrate an immediate, heavy financial need. That could be financial problems caused by medical debt; damage to your primary home; burial or funeral expenses; payments to prevent foreclosure or eviction; or certain expenses related to education or primary housing.

Despite the disheartening news that many Americans are so insolvent that they can no longer afford to leave their money in 401(k) plans, Fidelity did have good news for those who can. The average Fidelity 401(k) account balance was up 15 percent in the second quarter over the same time last year, although it was down from the first quarter of 2010.

Related Resource:

"Fidelity sees record number raid their 401(k)s" (Associated Press, August 20, 2010)