Has Anyone Cashed Out Their 401(k)?

[Marbles]

My comment wasn’t about logic or arguments. I simply asked what you were trying to say with your math in the context of you mentioning a mortgage.

Only that it is not as terrible as taking out a loan at 30-40%.

As you demonstrate, still not as good as leaving it alone.

The 30 year mortgage was simply as an extreme example to demonstrate the difference between a one time fee vs an interest rate.

 

[One300wsm]

Interesting video

 

[Davyalabama]

No, I keep putting as much as allowed into it!!!!!! I max out IRA's too. I don't have a mortgage on anything, houses nor condos. I pay cash for vehicles. I pay cash for any vacations. I'm not into debt, period.

 

[JBradley500]

I cashed out about $450 from a 401(k) when I was 18, and I still regret it.

Most people are financially illiterate. I'm no expert, but just knowing the basics can take you a long way. On average, your money doubles every 7–8 years when invested in the market, and that fact alone motivated me to start investing early and let my money work for me rather than the other way around.

Steps we try to follow:

1. Contribute enough to your 401(k) to get the full company match.
2. Contribute to and max out an IRA.
3. Max out your 401(k).
4. After that, I'm not as knowledgeable, but I put extra money into a brokerage account. Others may choose to invest in individual stocks, buy CDs, or pursue other options.

Many people don't have enough income, but plenty also live paycheck to paycheck while making payments on new trucks, campers, side-by-sides, bigger houses, and other luxuries, yet have no plan for retirement or even a period of unemployment.

Be smart.

 

[NRA4LIFE]

Another thing to consider is taking a lot of money out after 63. Any income that you make (company matches and gains) can affect your Medicare payments at 65 if you reach certain levels. Something to keep in mind.

 

[Rich M]

I get your point about using it (enjoy what you have worked for) and not loosing but I do think there are avenues to set up to ensure the government doesn't take it all if the time comes for the nursing home. For myself, I have four kids and do find value in leaving them something when the times comes. It can be a balancing act of spending it while young but not having it hang over your head that you won't be able to afford a comfortable retirement.

One other thing I keep seeing in the comments is that people keep living longer. According to google the average life expectancy in the US has decreased since 2019. I am sure some of it is covid related but I do think it is a trend.

My uncle and a diff guy, buddy both had a lineage issue w heart problems and the men dying in the 50s. Uncle is 82-83, buddy is 50s and living thanks to blood thinners.

Folks are aging like never before w blood thinners and pace makers.

My wife and i are factoring in old age care into our retirement plans.

 

[MuleDeerMike]

I haven't cashed out my 401k because I haven't retired yet. If I have to take money from my 401k to pay for something then I can't afford it.

 

[UncleNommies]

I cashed out my 401k at the ripe age of 26. I left my job of 8 years as a diesel technician/lead man where the company matched up to 15%, which i did. Paid the penalties, took the balance along with everything I had saved, sold my house and added that with the rest of my money. Used part of my savings to start a business with my brother. My wife and I lived with my mother for 2 years while my brother and I built my house out of my pocket. I now have no mortgage or debt and a successful small business at 30. I have zero regrets doing it. None of it would have been possible without God opening doors and guiding me to where I am today. I deserve none of it.

 

[Choupique]

borrowed against mine to buy a boat

I did that too.

Probably a mistake by most measures, but man I've given a lot of fish a ride in that boat.

 

[JVS]

Only way I would is if it was to buy a piece of real estate that I intended to get some serious return. Or to start my own business with much higher earning potential.

 

[Mangata]

Have stayed the course with mine.
I guess that I would consider loan or cashing out if there was an investment opportunity that i would otherwise have to pass on…

 

[One300wsm]

No worries Elon is going to cash it in

 

[SloppyJ]

Any advice on what to do with an inherited 401(K)? I know I have to do something with it within 10 years but I’m a little stumped on how to maximize it while reducing tax burden.

There arent many loopholes from what ive seen. Been dealing with the same for 3yrs. You only have to withdraw it all within 10yrs if the decadent was already taking minimum distributions and was over a certain age. That rule changed the year I inherited mine or id be sitting pretty. Now its gotten taxed to shit.

 

[ctafoya]

I've borrowed form mine in the past. I think paid myself back4 or 5%.