Ted Cruz warns all Americans with a 401(k) after ‘bloodbath’ midterm: Hardship at 3X normal because Trump won’t listen

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The stock market can soar while the people invested in it are pulling money out to keep a roof over their heads.

That was one of the more jarring points Sen. Ted Cruz made after Republicans lost the House and Senate in the midterm elections. In an episode of his podcast titled "Bloodbath," the Texas Republican called the result a "Watergate-level repudiation" and blamed his party for missing what was happening to people's finances.

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"Food is too high, gas is too high, diesel is too high, insurance is too high, life is too high," he said (1).

Then he took aim at one of President Donald Trump's signature policies.

"Tariffs have made everything too expensive, and the Iran war has dragged on too long."

To show how far some Americans were being pushed, Cruz pointed to a growing share of workers forced to crack open their retirement savings.

"In 2025, 6% of 401(k) holders took hardship withdrawals, paying penalties. That is a record, and triple the norm," he said.

Cruz didn't name his source, but the figure matches Vanguard's How America Saves 2026 (2) report. Vanguard found that 6% of eligible participants in the plans it administers took at least one hardship withdrawal in 2025. That's up from 4.8% a year earlier and roughly triple the pre-pandemic average of about 2%.

Money you take out through a hardship withdrawal is money that can no longer grow in your retirement account. And there can be a cost up front, too.

A hardship withdrawal from a traditional 401(k) generally counts as taxable income. If you're under 59½, you may also owe an additional 10% tax unless you qualify for an exception. And unlike a 401(k) loan, a hardship withdrawal can't be paid back into the plan.

The strain Cruz described is showing up at the grocery checkout, too. In a LendingTree survey (3), 29% of buy now, pay later users said they had used the loans to buy groceries, more than double the 14% who said so two years earlier. Other than groceries, BNPL users have used these loans to pay for medical and dental care, and utility bills (4).