You're watching...
Catherine Golladay, VP of 401k Education and Advice at Charles Schwab on new statistics showing 25% of workers are using retirement funds to cover exp...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Are you taking money out of your 401K.
A new report shows that more than a quarter all of you are raiding your -- long -- just to pay your bills.
Joining us now aunt Katherine -- she's the vice president of 401K education and advice and Charles Schwab got to welcome the program.
Thanks for having me not granted.
It is not a good idea to take money Audi -- 401K.
I understand that that's not the right thing to do.
But I put -- it.
In this economy -- the people have no choice what -- Well you're gonna have a hard time getting me to say it's a good idea but I I understand that sometimes its the last resort.
What I really think that individuals that should think about is if you're going to take that loan if you have no other choice.
Make sure is part of a long term plan and it Schwab what I would mean by that is.
As your paying back that loan.
Make sure you're doing things like creating an emergency savings death on -- -- house.
That's it I mean I think we've got to make a distinction -- I got got a 401K.
And I take a low and Alps from ships that's one thing.
Because I paid -- loan back and -- -- -- with interest not pay the interest to myself I don't -- -- such a bad thing and I've done it myself in the past.
There is a difference have a between taking a loan.
I just flat out taken the money out and spending it on a vacation and never putting it back in again.
Because that way.
You'll pay a significant penalty you'll pay tax on it's -- you really do not have it back again for your retirement so there's a distinction here between a -- -- -- -- flat out withdrawal isn't.
There isn't distinction -- you -- alone.
You're paying it back in your paying it back to yourself so people say what's the problem.
There are still consequences you're paying that loan back.
With after tax money.
And then when you take it out again when you take it out of retirement it's taxed again so that's not a good consequence the other thing I see people doing.
When they take a loan out they're trying to balance that loan repayment with their other -- they quit saving in their retirement plan that further compounds that I.
I do what I saw about statistic of quarter about views of people generally are taking money out of it that's a real danger signal.
Full what comes to what you needed when you actually retire at 59 and a half -- -- late today to signal.
-- I'm sorry we're out of time it's a good subject -- is a real warning shot across the balance a lot of people thanks for joining us after appreciate it.
Thank you expect three.
