(WJAR) — A growing number of Americans are tapping into their 401(k) accounts to make ends meet, which could be a costly mistake.

Certified Financial Planner and owner of Massey & Associates Jeff Massey said 6% of workers enrolled in 401(k) plans managed by Vanguard made hardship withdrawals last year.

He said this has been happening at an increasing rate for six consecutive years.

Emily Volz reports on if and when you should withdraw money from your 401(k). (WJAR)

Massey said there are a few reasons why more Americans are tapping into their 401(k).

“The average account is up 13% over the last year,” he said. “So people might be looking at that as kind of a windfall and saying, ‘Oh gee, there’s a lot more there than I had last year. Maybe I’ll just take some out.'”

He says the ever-increasing cost of living is also a factor.

“If we take into account what happened roughly a year ago with the tariffs and the inflation that that caused, a lot of people were having difficulty meeting their bills,” says Massey.

Massey said tapping into your 401(k) is usually not advised, for several reasons.

First, if you withdraw money from your 401(k) early, that money will then be taxed as regular income.

On top of that, you’ll also have to pay a 10% penalty.

So, what should you do instead if you need more cash to get by?

“If you’re a homeowner, what I’d prefer people do is get a home equity line of credit,” Massey said. “And that way you can borrow that money there, and you’re only required to make interest payments on the amount you pull out.”

He continued, “Now, not everybody owns a home, so they wouldn’t have that option, which underscores the importance of planning and having an emergency account.”

Massey said emergency accounts should cover six months’ worth of living expenses.

Another option is to take out a 401(k) loan.

Massey said a 401(k) loan is different from a hardship withdrawal because, instead of taking money out of your account, you’re borrowing against it through a loan, meaning you’re basically borrowing from yourself.

These loans do have to be repaid with interest, but since you’re borrowing from yourself, those interest payments are really going back to you.