By Henni Espinosa, ABS-CBN North America Bureau
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San Jose, CA – 2008 was not a good year for Richard and Annie Martinez. Both were laid off from their full-time jobs…Richard as a financial analyst and Annie as a manager for a healthcare company.

Annie shared, “It was very stressful to figure out, ‘What are we going to do?  What will happen to us?’”

To pay for their mortgage and make ends meet, Richard and Annie took out 60% from their 401K savings — more than $100,000 combined.

Richard said, “I was getting unemployment benefits but I needed more money for my family.  I had a baby on the way and I had mortgage to pay.  I looked at my retirement money and thought that I might need to use some of it.”

Fidelity Investments say the number of Americans taking out loans or hardship withdrawals from their 401K retirement savings rose to the highest level in 10 years because of the recession.

About 11% of people with plans have taken out loans from their retirement savings in the last year — up 9% from a year ago.

The Martinez couple started contributing to their 401Ks early — Annie at 18 and Richard at 24.  They say they had more than enough money saved to use during hard times.

People who take out their 401Ks are taxed according to the prevailing rates, plus 10%.

So Richard invested some of the retirement savings he withdrew.

He said, “I invested it in vehicles where I never get taxed, such as Roth IRA, cash value life insurance and municipal bonds.”

The $100,000 they took out from their retirement savings lasted the Martinez couple one year.

Annie just has a part-time job for now.  Richard decided to open his own financial business. Ironically, he gives people advice not to use their 401Ks.

But if push comes to shove, they say people should not hesitate to use their hard-earned money.

Annie said, “I don’t regret using our retirement savings, because we needed it.  We are building our savings again and it’s almost back to normal.  You have to do what you have to do to save your family.”

Financial experts say despite the rising loans and hardship withdrawals, people are working harder than ever to save for their retirement — a time when they can feel secure enough to leave the workplace and enjoy the fruits of their labor.