More employees are raiding their retirement accounts

February 27, 2013, 1:00 PM UTC

FORTUNE — Back in the good old days when most full-time employees were covered by a defined-benefit pension plan, one thing was certain: You couldn’t get your mitts on the money until you actually retired. But now that we’re all in charge of funding our own golden years through defined-contribution plans like 401(k)s, that’s no longer true — and, says new research from the University of Michigan, that’s a problem.

Why? Simple. “If you leave people to their own devices, it’s tempting for them to use their retirement savings before they retire,” says Frank Stafford, an economist who co-wrote the study. “Our data show that they’re withdrawing money for reasons ranging from out-of-pocket medical expenses, to home repairs of more than $10,000 like a new roof, to discretionary expenses like remodeling their kitchens and installing granite countertops.”

The most common reason for early withdrawals is mortgage loan distress. People who are behind on mortgage payments, or who fear they will fall behind, are raiding their retirement accounts just to keep up. “Our analysis confirms what everyone suspected, which is that people are also using their retirement savings to help out in the short term, when a child is going to college or a spouse loses a job,” notes Stafford.

MORE: Cut your exposure to Medicare taxes

“Sure, many employers make participation [in 401(k) plans] mandatory, but you can subvert your employer’s mandate by borrowing against the money for any number of reasons,” he adds.

The study found that about 6% of adults aged 25 to 44 reported cashing in some of their pension money. At age 59 ½, when penalties for early withdrawal end, the percentage of Boomers raiding their retirement funds rises to 15% — a proportion about equal to the rate of withdrawal among those aged 65 and 66, who are more likely to have already retired.

These data come from the Panel Study of Income Dynamics, a survey of nationally representative households that the U-M Institute for Social Research has been conducting since 1968. Researchers interviewed the same families every two years, to get a look at how changes in the economy affected how people handled their retirement savings. Early withdrawals jumped in 2001, after 9/11, then stabilized for while and leapt again from 2007 to 2009.

Stafford and his colleagues believe the temptation to spend retirement money early is going to increase. “With defined benefit plans, people cannot touch the money before they retire,” Stafford says. “Now, with General Motors (GM), Ford (F), and many state and local governments offering ‘conversions’ of defined benefit pensions, giving out lump sums in place of monthly pension checks, this problem [of using retirement funds for short-term expenses] is going to get bigger.”

The study’s most ominous finding, however, is that only about a third of employees have any retirement savings to dip into, either now or later on. “We found that participation in defined contribution plans declined, from 33% of employed men in 1999 to 2001, to 30% in 2007 to 2009,” Stafford says. “That is the opposite of what we expected.”