More Americans Are Treating Their 401(k)s Like Cash Machines

The 401(k) is doing double duty as both a retirement account and a source of emergency funds for more Americans.

A record share of 401(k) account holders took early withdrawals from their accounts last year for financial emergencies, according to internal data from Vanguard Group. Overall, 3.6% of its plan participants did so last year, up from 2.8% in 2022 and a prepandemic average of about 2%.

Retirement plans such as the 401(k) are designed to keep Americans’ nest eggs out of reach until later in life. And values in...