Workers’ financial stability can be tested by many challenges throughout their careers, one of the most significant being irregular, often significant, expenses that can harm their retirement security, according to a report from the Employee Benefit Research Institute released Friday.

In its report, EBRI considered “spending spikes” among public sector defined contribution plan participants and how these irregular or unexpected costs effected their finances. The study, carried out in conjunction with J.P. Morgan Asset Management, defined a “monthly unfunded spending spike” as any expenditure that exceeds the previous 12 months’ median spending by 25% or more and for which the household’s income and cash reserves were insufficient to cover the spike.

According to the research, 29% of households in the study experienced at least one such unfunded spending spike during the study period. Among households earning $150,000 or less, 60% had unfunded spikes totaling more than $2,500 throughout the year, and 82% of these spikes exceeded what could be covered by income alone.

The likelihood of a spending spike rose with an increase in the household’s spending ratio and starting credit card debt but decreased as gross income increased. However, higher earners were not immune: Nearly one-quarter of households with incomes greater than $100,000 still experienced a spending spike.

These spikes led a significant percent of workers to increase their credit card debt or take out DC plan loans, which in turn can significantly undermine a person’s retirement readiness, the study stated.

In analyzing more than 3 million retirement account holders, 7% of households with a spending spike took a new plan loan, and 31.7% increased their credit card debt in the year of the spike—figures notably higher than those without spikes: 2.7% and 25.9%, respectively.

Households tended to rely on credit cards before resorting to a plan loan. Among those with a credit card utilization rate of less than 79%, between 37 and 47% increased their debt. However, once credit card utilization exceeded 80%, only 22.4% increased their debt, while 11.5% took out new plan loans.

“It is clear that spending, debt and saving for retirement are explicitly linked,” Craig Copeland, EBRI’s director of wealth benefits research, said in a statement with the report release. “These links between spending and debt suggest that retirement planning is not wholly different by place of employment, even where benefits availability may be dissimilar, but part of a broader holistic financial planning journey where all factors need to be incorporated. … The decision to a take a plan loan is not just dependent on what happens in the plan, but on the total financial profile of the participant.”

The study revealed that, much like private sector workers, public sector DC plan participants who cannot meet unexpected expenses are also likely to accumulate credit card debt, which can have long-lasting repercussions on their financial security, according to EBRI. Workers with higher credit card utilization tend to contribute less to their DC plans, resulting in lower account balances. The researchers also highlighted the need for accessible emergency savings to prevent a cycle of increasing debt that can jeopardize financial stability, no matter where the individual works.

EBRI’s findings were drawn from the PRRL Database, an opt-in collaboration among public retirement plan sponsors, EBRI and the National Association of Government Defined Contribution Administrators. The database includes data from 267 defined contribution plans, more than 3 million retirement accounts and $170 billion in assets, as of year-end 2021.