Why we file for a 401K Hardship

In bad times such as these - people filing for a 401K hardship increases because of some unfortunate event such as, a loss of employment or income, a medical emergency, etc.  One of the main reasons that we have to tap into our 401K is because we don't have a lot of savings on hand for emergencies.  The American savings rate is barely at 3% which generates the assumption that most of us are living paycheck to paycheck.  

But I ask myself - why don't Americans save more?  Is it that we just love to spend?  Are we just inherently impulsive, unsatisfied, and really need a new suit every paycheck? or car? or cellphone?

The best answer I could muster up is that there is too much incentive, or pressure, spurred by our own government for us to use our discretionary income towards consumption and not saving.  When our government keeps interest rates low, and simultaneously prints billions of dollars - it takes away the incentive to save our money.  Keeping this money in a savings account that only earns 1% (if you're lucky) doesn't make sense when real inflation is between 6%-10%.  So rather than lose money in a savings account - we spend it...or invest it.  Either way, it doesn't get saved for a rainy day.

And this is one of the primary reasons that leaves most Americans without much choice during an emergency, other than to file for a 401K hardship.  Yet - when we do file for hardship, we are now subject to taxes and penalties (Thanks Uncle Sam!).  Now, I do understand the reasons, or rather the intent, behind the penalties and taxes for early withdrawal....the government wants us to have something for retirement and wants to discourage us from tapping into our 401K.  BUT - at the same time, the government prints money and keeps interest rates low to prevent us from saving our money.  Talk about a CATCH 22!

Regardless of what our government is doing - I recommend we save our money anyway.  And also cut back on our spending, in addition to investing in a 401K.  Use a little of your discretionary paper money to buy some hard money such as silver or gold... and leave a little of your paper in the bank.  So if the government continues printing - the hard money will increase in value, giving us a hedge against inflation.  And should bad times arise - we can pull from our bank account instead of our 401K.