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You report being released as we pictures at a whopping -- Our are breaching their 401K accounts for non retirement needs and expenses experts say we'll have dire implications -- short term and long term.
If you need it fast cash to pay bills are there any other alternatives.
-- is a personal finance expert he's here with the answer is great to see you again.
We've got to ask you turn out to be here think you would got to start out by saying why this is a really bad idea and -- crazy tax and penalty implications as.
Can we really expensive right.
That's right if you plan to take money from your 41 K stay away there cannot be a worst place to take money before retirement.
Melissa think about this almost 300 billion dollars flowing to 41 K money every year.
And a third actually a fourth of that comes out for people pain.
Car loans credit cards colleges.
Those types of bills are simply hemorrhaging people's future retirement ten make bills today that's got a stopper -- have a big problem down the road.
Now you can take a loan from your 401K.
And it there's an interest rate to we don't necessarily get.
You know that terrible tax penalty and everything if you pay it back within a certain amount of time that you really have to follow the rules and pay it back right.
That's right think of the 41 K -- is a worst case scenario type of loan most for one -- let you borrow up to half of the balance.
You don't pay yourself back the interest it -- -- as you said some of the taxes if you're younger than 59 and a half.
No penalties but it does take away from future savings -- and companies don't match on what you borrow -- -- some other alternatives to take money -- -- away like -- Feingold.
Yeah let's get it has all treasurer of all day today people -- -- stories and why this is such a terrible idea they haven't been telling people.
Who are in the straits what they could do instead to what are your best idea.
It's let's make a real symbol for viewers first of all look it easy to access cash.
Look at your savings account your checking account they don't make much interest but there's no penalty or taxes or take money out of those.
Ideally -- built up about three to six months of committed to living next.
Now here's an account yet air 401K you don't have cash in your savings your checking it can't give me another one.
The next we wanna go to or some of these other liquid investments looks like you've got some stocks and bonds authority in an IRA or a retirement account.
There maybe a smaller penalty -- -- smaller tax.
Happened to those first the key here -- you don't -- willingly give money to Uncle Sam if there's ways that you can save on taking money elsewhere.
Other places would be like a CD at the bank for example amount -- paid much.
But again they avoid some of these big penalties and taxes all -- they -- -- think about a loan from a family member or friend.
That can no damage the relationship long term not the perfect way to go but if you're in these -- you -- -- look creatively at ways to save money.
And save on -- early withdrawal penalty that's 10% you shouldn't have to be responsible for.
You really -- -- from a friend or family never before you had -- attacks that occurred about and what would you do you personally.
Well I wouldn't do either of -- -- -- -- -- national I didn't like save save save.
I would I would work out with the most amicable family number I could find work out some kind of a nice arrangement there.
-- -- -- when you think what we think about these types of loans you wanna avoid those at all cost if you're in a desperate situation.
Again make sure you realize the cost if you're in the 20% tax bracket Melissa yeah you're younger than 59 and a half.
Every -- you take out gonna cost you 39 cents yes a big time hit to take money out to -- bills today.
And -- kids are so important now -- -- back in the eighties four out of five people had a pet -- some type now that's not the way goes anymore maybe one in five -- 401K is the only thing.
That we have that's really cushioning your retirement and less you have kids have become very rich and and that can be great too but.
Anyway not -- -- plan that and make sure kids are rents are right thanks so much for coming on we appreciate your advice next.
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