Cecily O'Connor
RedwoodAge.com

About one quarter of adults are tapping their retirement savings to alleviate financial pressures brought on by family obligations and home purchases.  

While the move may temporarily solve a financial problem, it comes with high costs and a big risk. 

Baby boomers nearing retirement age often struggle the most in this thorny investment situation. That's because adults aged 45 to 54 are less likely to be able to pay back the money they have prematurely withdrawn from retirement funds, according to a survey conducted by Harris Interactive for The Wall Street Journal Online. Even among the highest income earners in the survey - those who take home at least $75,000 annually - more than one-quarter cannot pay back their premature withdrawals. 

Pressures that motivate early withdrawals seem to begin at age 35, when nearly one-third of respondents report dipping into retirement accounts. The most common reasons for premature withdrawals include a family member losing a job and the cost of a down payment on a home.

Overall, adults in the lowest income tier, under $35,000, are more likely to be affected by a death in the family and require premature withdrawals. However, only about one-third of this segment is actually planning for retirement. Respondents with annual income of at least $50,000 are less likely to tap funds from their retirement investment products.

Most financial planners would advise that boomers not to take money out of retirement funds - except for the actual retirement. That's because boomers need to protect their retirement savings as they age. Older adults especially don't have as much time to earn back any losses. 

Additionally, taking cash out of tax-deferred accounts can result in significant penalties in addition to having to pay the taxes then due on the money.

Status Check
Professional status can determine whether someone will bank on their retirement account. For example, adults working full-time feel less pressure to withdraw funds, with nearly 70 percent of those actively planning for retirement never having done so.

Part-time workers experience more pressure from housing- related expenses, and are more apt to take funds out for a down payment on a home or to meet mortgage payments.

Regardless of work habits, most adults now start building their nest eggs in their early 30s, said Peggy Lebenson, senior vice president for financial services at Harris Interactive. Those with more education tend to be engaged in every retirement planning activity. 

"On average, those who are planning for retirement began to do so at the age of 32," she said. " Each subsequent generation seems to be increasingly aware of its need to begin retirement planning as early as possible. Single respondents continue to begin retirement planning at an earlier age, presumably because they have the resources to do so."

At the same time, a majority of respondents across all income levels continue to see Social Security as a primary source of income in retirement, even though the system could face shortfalls by 2041 unless new sources of funding is established. Respondents among the lower middle class, earning $35,000 to $49,900 are more likely to rely on Social Security compared to the total. The wealthiest respondents, however, are most likely to be invested in 401(k)s and IRAs.