- Research supports idea that prohibiting plan loans would not necessarily improve participants’ retirement security, as the loan usage is more likely to help with expenses that impact retirement -
(Washington, D.C.) – A new research report, “Where Are Households Spending Their Defined Contribution Plan Loans: An Examination of Private-Sector Participants,” published today by the Employee Benefit Research Institute (EBRI) and J.P. Morgan Asset Management, found health care and housing spending, particularly among the households starting a new mortgage, stood out as sources of spending increases when households take a defined contribution (DC) plan loan. This supports the idea that prohibiting plan loans would not necessarily improve participants’ retirement security, as the loan is more likely to help with expenses — health care and homes — that impact retirement. Without the option of taking a plan loan, participants would seek loans outside the plan to fill these spending gaps, and those loans may have terms less favorable than those of a plan loan.
“Workers’ finances can face many challenges over their careers, potentially leading them to have to take on debt or find other sources of financing to cover various financial challenges. This research focused on which expenses increased when private-sector DC plan participants took a plan loan. The expenses that stood out were health care and housing, which are essential for retirement, rather than expenses that are for current consumption. Consequently, the plan loan could negatively impact retirement savings in the near term, but it could help the participants’ financial status in the long term by addressing expenses that can carry over to retirement and doing it in a manner that is more efficient for the participant,” said Craig Copeland, director, Wealth Benefits Research, EBRI.
Key findings in the new report include:
• Among those with a new 401(k) plan loan, health care spending was the most likely to have increased, as 47.6% of households where a participant took a loan saw their spending on health care increase by more than 10% in the year they took the loan. This was followed by travel (21.7%), entertainment (20.2%) and non-specified cash spending (20.0%). Comparing the spending increases by categories with those who did not take a loan, only health care spending showed a higher likelihood of having increased by more than 10% among those taking loans. Otherwise, spending changes were very similar between households with or without a plan loan.
• Loan usage increased among those with higher credit card utilization, which is an indicator of households being more likely to be financially stressed. Spending increases on health care were more prevalent among the financially stressed households whose plan participants were ages 50 years old or older, as 58.7% of the households where a loan was taken had this increase compared with 52.5% of the households where a loan was not taken.
• The study also looked to see if any category spending share increased by more than 5 percentage points from the year prior. The spending categories most likely to have seen an increase in their share of total spending of this size were unspecified cash spending (22.8% of the households), housing (21.0%) and health care (19.7%).
• Only housing spending and unspecified cash spending had higher likelihoods of share increases for those taking a loan versus those who did not. Otherwise, the likelihoods of the changes in the shares of spending in each of the other categories were either similar between the households or less for the households with a participant taking a plan loan.
• Households who started mortgage payments in the year of the loan incidence analysis were more likely to have taken a plan loan than those who did not start mortgage payments in that year — 12.5% compared with 9.6%. This was true for households with plan participants of all ages. Looking at this correlation in the opposite direction, the percentage of those having a new mortgage given that they had taken a plan loan was 5.9%, compared with 4.4% starting a new mortgage when they had not taken a plan loan. Again, a higher likelihood of starting a new mortgage for those who had taken a plan loan was found across all ages.
“This research found that higher debt can have a long-lasting impact on retirement security, since higher credit card utilization is correlated with lower 401(k) plan contributions and account balances. As a result, the availability of emergency savings to help cover expenses can be a critical factor in preventing or stalling a cycle of increasing debt that can significantly impact retirement readiness,” said Michael Conrath, chief retirement strategist, J.P. Morgan Asset Management. “Furthermore, the finding that many participants have spending increases on health care when taking a plan loan suggests that examining the health savings and spending accounts available to DC plan participants could also help improve finances, showing the intersection of health and wealth.”
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Data Sources more prevalent among the financially stressed hou seholds whose plan participants were ages 50 EBRI/ICI 401(k) Plan Database — This is a participant-level database# c o n s # tru cted from the administrative records of 401(k) plans at the end years ol New d P er orso old na el Fin r, as 5 an8.7% of ce Resea th rch R e hoep use or ht ol Fi dnds s wh Incr eree a as lo es an in wa Hs t eaake lth Car n ha e a d th nd Hom is incre e E ase xpen com ses pare in d of each year, representing a large cross section of 401(k) plans. The dat abase represents a broad range of participants — including those with 52.5% of the householHou ds wh see ho re ld a s lo W ait nh De was fin not t ed C ake onn tr . ibution Loans w ho are young, old, new to their jobs, or have been with their current employers for many years. Chase Data - JPMorgan Chase Bank, N.A. (Chase) serves 66 million U.S. households with a broad range of financial services including • T -h R e esear studc y hals sup o loo pork ts ed to idea see that ifp an rohib y cate itin gg or py lan sp en loan din s w g sould hare n in ot n crease ecessar d by ily im more prth ov ae n p 5 artic perc ipa enn tage ts’ 1 ch Ch eckin ase sg e,r sa ves v in ne g arl s, in y ha ve lfs o tm f Am en et ris c,a’ cr s ho ed us it ec ho ar lds ds wi , a th na d lo broan ad r s. an Cha ge os fe fi’na s s nc cal iale s a ern vid ce wide r s, includ e ing ach pe a rso llo na w l s ba fnk or ing a ,c c o re m dp it c re ar h ds e,n m siv ore tg v ag ie es, a w o ut fo h fi o na unc seih ng o , i ld nv estment advice, small business loans and payment processing. For more information about Chase, visit the following website: https://www.chase.com/digital/resources/about-chase. finances. In this analysis, the Chase data sample is restricted to the households in 2021-2022 who use Chase as their primary banking proi eti nr ts em fro en m t th sec e u year rity, p as t rior h. e Th loan e s p uen sag de inis m g cate ore gor lik ies ely m to h ost elp likely with to hav expee nses t seenh an at im incp re aase ct reti in rth em eien r t - 2 Data privacy and contractual relationships with recordkeepers have been carefully protected. institution, and their total household spending through all payment mechanisms (select de-identified credit and debit card transactions, sh are of total spending of this size were unspecified cash spending (22.8% of the households), electronic payment transactions, check and cash payments) and sources of income including wage income, Social Security, annuity, F hor ou im sinm g ed (21 ia .0% te r )ele anase: d healt 12h /9 c /2 are 5 (19.7%). pensions, etc. can be linked to the EBRI/ICI Database. For more information about Chase, visit the following website: https://www.chase.com/digital/resources/about-chase. For more information: Ron Dresner d • rO esn nly er@eb housin ri.or g sp ge nding and unspecified cash spending had higher likelihoods of share increases About EBRI The Employee Benefit Research Institute is a non-profit, independent and unbiased research organization that provides the most for those taking a loan versus those who did not. Otherwise, the likelihoods of the changes in the authoritative and objective information about critical issues relating to employee benefit programs in the United States. The organization sh (W a ashin res of g ts on, pen D d.in C.g ) – in A n each ew o rf the esearoth ch r eep r cat ort eg , “or Wh ies erwere e Are eit Ho hu er seh sim olila ds Spe r betwee nding n Th their e ho De use fine hol dd s or also coordinates activities for the Center for Research on Health Benefits Innovation, Financial Wellbeing Research Center and Retirement C less fo ontrib r t uh tion e househ Plan Lo olan ds w s: An ith Ex a p am artic ina ip tion ant of tak Pin riv g aa te p -Sec lan t lo or an P.a rticipants,” published today by the Security Research Center and produces a variety of leading industry surveys during the year. For more information, visit www.ebri.org. Employee Benefit Research Institute (EBRI) and J.P. Morgan Asset Management, found health care About J.P. Morgan Asset Management an • Ho d h uousing seholds spe wh no d in stg arted m , particor ularly am tgage pong aymth ent e s in househ the ol year ds s of tartin the g loa an n ew incim de or ntg ce ag an e, alysi stoo s d were out as more J.P. Morgan Asset Management, with assets under management of?$4.0 trillion?(as of 9/30/2025), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major likely sources to ha of spe ve tak nding en a inc plan reases loan when than h th ouse ose h wh old o sd tiak d n e ot sta a define rt m dor con tgag trib e u ption aym(e DC) nts p in la th n at loan year . Th — is market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, sup 12.5% porc ts om thp e are ide da w th ith at 9.6% prohib . 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(NYSE: JPM) is a leading financial services firm based in the United States of America (“U.S.”), with operations h to fill t ad not t hese ake spe n a np dla ing n lo gap ans., Aga andin th , a os h e igh loan er s like ma lihoo y had ve of term starti s le ng ssa fa nv ew orab mle ortgag thane th for os e o thof a se p who h lan loa an d . worldwide. JPMorgan Chase had $4.6 trillion in assets and $360 billion in stockholders’ equity as of September 30, 2025. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing taken a plan loan was found across all ages. and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world’s “ Workers’ finances can face many challenges over their careers, potentially leading them to have to most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at t “ak Th e is r on esear debt ch or f oun findd o th tha er t h so igh urer ces deb of tfina can n h cing ave ta o c loo nv g er -las vari tinous fin g impac an t c on ial c reti hallen remen ges. t sec This r urity esear , sinc ch e www.jpmorganchase.com. f h ocu igher sed c ron edit whic carh d e uxp tiliz en ation ses inc is c reased orrela twhe ed wi n th priv loa w te er -sec 40t 1( or k) DC pla p n lan con ptrib artic uipa tions nts an too d k ac a coun plant loan. This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to b Th alan e expe ces.n As ses t a r h esu at s lt, too thd e out availability were healt of em h cer arg e en an cd y h sa ousing vings , to wh help ich ar coe ver essen expe tial nses c for ra eti n b rem e aen critic t, al be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. r fac ath tor er in than prev expe entin nses t g or h sa talling t are fa or c y cc ule rren of t in cc onsum reasinp g tion. debt C th onseq at can u en signific tly, th an e plan tly im lo pan act crould etirem ent Any examples used are generic, hypothetical and for illustration purposes only. 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In “ st Furth atus erm in th or e e, lo n th ge ter fin m d ib ny g ad tha dt ressing many p eartic xpen ipa ses t nts ha ht ac van e spe carry o nding ver inc to r reases etirem on en healt t anh d c do aring e when it in a addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. m takin ann g er a th plan at is m loan or su e g e g ffi es cts ien th t a for t e x th am e p ining t articipa he n h t, ealt ” said h sa Cvings raig Can opelan d spe dn , d ding irec ac tor c,oun Wealt ts ah v ailable Benefits to DC Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or R pesear lan partic ch, EBR ipan I.ts could also help improve finances, showing the intersection of health and wealth.” investment techniques and strategies set out are for informational purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that T Ko vi ey find ew ing the s in comp the le n te ew rep rep oror t, t “ Wh includ ere e: Ar e Households Spending Their Defined Contribution Plan investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and Loans: • Amo n An g th Ex os am e ina with tio a nn of ew Priv 40a 1(k) te-Sec plat n o r P loaa nrtic , healt ipan hts c,” a re vissp it e hn ttp din s:g //ww was w th .eb e m ri.or ost glikel /docs/d y to hav efaue lt- taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results. increase source/pd b, rie as 4 fs/ 7.6% o ebri_ib f h _6 o47 use _dcloansp holds whriv ere se a c - p 4d arti ec c25 ipa .p nd t f?s took a fvrsn= lo77 anb sa f052 w their s f_1. pending on health care increase by more than 10% in the year they too k the loan. This was followed by travel (21.7%), DATA PRIVACY: We have a number of security protocols in place which are designed to ensure all customer data are kept confidential and secure. We use reasonable physical, electronic, and procedural safeguards that are designed to comply with federal standards to protect entertainm (ME ent (20 DIA N .2O %) TE: an Td o n rec onei -sv pe th ecife c iedomple cash stp e r en ed se inar g c (20 h r.epo 0%)r . tC , o cm on ptari act n g Ron Dr the sp ee sn nd ein r a g t increases and limit access to personal information. There are several key controls and policies in place which are designed to ensure customer data by categories with those who did not take dr es a lo ner an@ , o ebri.or nly healt g).h care spending showed a higher are safe, secure and anonymous: (1) Before J.P. Morgan Asset Management (JPMAM) receives the data, all selected data is highly likeli hood of having increased by more than 10% among those taking loans. 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