More and More People Withdrawing From 401k’s
It seems that market panic has hit, but also a rise in people withdrawing money from their nest eggs – aka 401k’s has been seen as people are getting more and more desperate for cash as well as getting panicked about the stock market and perhaps prematurely withdrawing money in an effort to save it from the falling stock market, even in the face of some pretty hefty early withdrawal tax penalties which most people want to avoid like the plague if they can.
I understand the tempatation to withdraw early from your 401k or other retirement savings accounts early, I’ve been there, and in fact I did take a loan against mine one time, but it was for a nominal amount, and because it was a loan there was no penalty and I also paid myself back with interest, so I’d like to think that it was worth it when I was in a crunch for the money years ago before I started getting paid better at my job.
However, as any financial expert (I don’t claim to be one, don’t get me wrong), would tell you, I think that withdrawing early from your savings accounts for retirement should only be a last resort if you really need the funds bad for something that may be an emergency, say for emergency mortgage payments if suddenly money dries up or something like that where you are in danger of losing large assets.
Other than that, I don’t think it should be done, not only because you are banking against your own retirement, but also because you are paying a significant portion of the proceeds in taxes, enough to make anyone think twice about withdrawing early from these special tax sheltered funds, as they were designed to do by the federal government. Funny how they’re so willing to bail out big corporations though, and all the American people get is a small rebate check.
I’m wondering where all this money is coming from, that’s what worries me. If you’re really worried about your money being in the stock market in your 401k you may want to investigate putting it in a money market account or something much lower in risk (talk to your financial advisor), until the market stabilizes.
