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Retirement Saving for retirement - questions about pensions and pension schemes, 401k's, public and private company pensions, and other saving schemes.

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  #1  
Old 09-17-2008, 01:00 PM
Pandrperkins@gmail.com Pandrperkins@gmail.com is offline
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Default early withdrawal from retirement

I have just lost my job, my wife makes 40,000 a year; we live in 140,000 home and debt around 40,000. I have retirement cash value of 147,000. What are the ramifications of cashing in and paying off the debt and some of the house?
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Old 09-25-2008, 12:13 AM
Mike P Mike P is offline
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Default Re: early withdrawal from retirement

Early withdrawal from an IRA, 401k, or other similar retirement account is going to be subject to a 10% penalty in addition to normal income tax rates. It's generally a poor idea unless you need the money immediately to pay bills.
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Old 09-27-2008, 11:12 PM
User Name User Name is offline
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Default Re: early withdrawal from retirement

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Originally Posted by Mike P View Post
Early withdrawal from an IRA, 401k, or other similar retirement account is going to be subject to a 10% penalty in addition to normal income tax rates. It's generally a poor idea unless you need the money immediately to pay bills.
Not to mention how much money you will lose from 1st, taking the money out (penlites and taxes will kill you), 2nd spending it, and 3rd, the about of money you will be losing from not being invested will be a MAJOR loss. Even more so, if you are older, you won't have as much time to start over. A very poor move IMHO. Hopefully everything works out for you. When you get back on your feet, be sure to save 6-8 months of your salary in an emergency fund for just such a reason. A high-interest savings is where I like to keep mine. Good Luck
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Old 11-20-2008, 05:55 PM
AYANNA AYANNA is offline
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Default Re: early withdrawal from retirement

I think you need to pull it out and put it in an investment that has a fixed return rate and with the investment company I'm at they even give you quarterly checks off of your princiople, so you don't have to touch your initial cash you can live off of your interest and still have your whole principle to go back to when you get ready.
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Old 12-19-2008, 08:10 PM
MonSavvy MonSavvy is offline
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Default Re: early withdrawal from retirement

I have to ask you, are you a professional in this field? Some of the advice you offer people who are struggling is very risky and usually would end in disaster. Not to mention dropping everyone into a variable annuity or hedge fund.

Last edited by MonSavvy; 12-19-2008 at 08:27 PM.
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Old 12-24-2008, 11:30 AM
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GarySpicuzza GarySpicuzza is offline
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Default Re: early withdrawal from retirement

Quote:
I have just lost my job, my wife makes 40,000 a year; we live in 140,000 home and debt around 40,000. I have retirement cash value of 147,000. What are the ramifications of cashing in and paying off the debt and some of the house?
Pandrperkins,

The ramifications are significant. Taking money out of a qualified pension plan will cost you a 10% penalty imposed by the IRS if you are under age 59 1/2 PLUS you will have to pay tax as ordinary income on the amount you withdraw. If you are in a 28% tax bracket it will cost you 38 cents on the dollar to do such a thing and would be a huge mistake.

You say you lost your job.

Then go get another job, regardless, whether or not you are over qualified and under paid for the new job.

AYANNA wrote:
Quote:
I think you need to pull it out and put it in an investment that has a fixed return rate and with the investment company I'm at they even give you quarterly checks off of your princiople, so you don't have to touch your initial cash you can live off of your interest and still have your whole principle to go back to when you get ready.

AYANNA please link us up to your investment company.

Bernard Madoff sent his clients quarterly checks also showing consistent gains of 12% to 18% or more per year for the past ten (10) years.

Certainly you understand my skepticism.

Please link us up.
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Old 02-17-2009, 09:48 PM
isthisused isthisused is offline
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Default Re: early withdrawal from retirement

This seems to me to be the average persons first resort(not pointing fingers, I once pulled $8000 out of my own 401K) But Every financial adviser I read (Money, Smart Money, and Kiplingers) every financial talk show host I watch(Suzy Orman,Clark Howard, and Dave Ramsey) all say this should be your LAST resort. I personally regretted very much taking that money out. after taxes and penalties it has cost you close to 40% of what you take. and if you punch into a compounding interest calculator and see how much you robbed your retirement of thatís where it really hurts.

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Old 02-20-2009, 09:32 PM
isthisused isthisused is offline
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Default Re: early withdrawal from retirement

Quote:
Originally Posted by Pandrperkins@gmail.com View Post
I have just lost my job, my wife makes 40,000 a year; we live in 140,000 home and debt around 40,000. I have retirement cash value of 147,000. What are the ramifications of cashing in and paying off the debt and some of the house?



Another thing acured to me about your intention to get money for the purpose of paying down debt, paying extra toward debt during a financial crisis is also contrary to what most financial advisers say to do. Paying off debt is a priority when you have sufficient income. But during times of crisis you want to pay the minimum payments on time every time and hoard every extra penny that you can. Paying extra toward your mortgage wonít help you keep your house if in 6 months you cant make the payment. Also if you are short on your mortgage that extra money you gave the credit card company wont help you either. When you are back to work remember how those debt payments were an extra burden and get them paid off. Good luck with the job search!
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