president Donald Trump last week took exception to a proposal backed by one of his economic advisors to let Americans tap their 401(k) savings for home downpayments – an idea that many financial advisors also oppose.
“I’m not a huge fan. Other people like it,” Trump told reporters on Thursday aboard Air Force One en route to Washington from Davos,Switzerland,where he had attended the World Economic Forum’s annual meeting. Kevin Hassett, director of the National Economic Council, told Fox Business on Jan. 16 that the president would unveil such an initiative while in Davos.
Trump added, “One of the reasons I don’t like it is indeed that their 401(k)s are doing so well.”
The average 401(k) balance jumped 9% in the third quarter to $144,400 from the same time a year earlier, according to Fidelity Investments. The amount marks an all-time high.
among 126.9 million private-sector workers, 72% have access to a retirement plan at work, according to the Bureau of Labor Statistics. 53% of all workers participate in a plan.
There are already ways for people to tap their 401(k) or individual retirement account to access money for a down payment – in some cases without paying an early withdrawal penalty – but experts say using retirement funds for a home purchase may not help workers with either goal.
“I really view tapping retirement money more as an option of last resort,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York and a member of CNBC’s Financial Advisor Council.
“By and large, if [someone] is using retirement money to reach other goals, I would raise questions about priorities and affordability ” Boneparth said.
Affordability is a key issue for consumers
Homebuyers are increasingly relying on their retirement savings to cover rising down payments, a trend fueled by high home prices and limited inventory. the median down payment reached 19% in 2024, the highest level since 1989 for first-time buyers and 2003 for repeat buyers, according to the National Association of Realtors (NAR). The NAR data shows a clear shift in how buyers are financing their purchases: to illustrate, a 20% down payment on a $409,500 home requires $81,900, while a 10% down payment is $40,950. While the average 401(k) balance is $148,153, as reported in Vanguard’s 2025 How America Saves report, these funds are not evenly distributed. Younger workers, who are often first-time homebuyers, typically have substantially lower balances. According to Vanguard’s 2025 How America Saves report: NAR data indicates that 59% of first-time buyers use personal savings for their down payment. However, 26% tap into assets like 401(k)s, IRAs, or stocks, and 22% recieve financial assistance from family or friends. Using retirement funds for a down payment is a growing concern, as it potentially jeopardizes long-term financial security. “Disrupting retirement dollars for a different goal” can have lasting consequences, experts warn.Down Payment Trends
401(k) Balances and Down payment sources
