51% of Americans Make This 401(k) Mistake - It Could Ruin Your Retirement.

[@user-mm8jv3tn2l]

Erin, I really appreciate your videos. I have never withdrawn money early from my retirement accounts. I think it is really important to spend less than you make and establish an emergency fund as soon as you possibly can. Life does come with the occasional major unexpected hits. Once you have an emergency fund in place, you are able to live without the additional stress load of the "what ifs?" Not that you become immune to bad things happening, but you can navigate them without the additional stress of "how am I going to pay for this?" It is impossible to convey the additional sense of well-being once you have established an emergency fund and know you are contributing to you own future well being, Being 3+ years into retirement, I can attest that discipline is well worth it when you can plan your days, weeks and months not restricted by worrying about money. Thanks for your great content! RSB in NC

[@garypeiffer1362]

Thanks! Appreciate the work and energy you put into your video offerings! Keep up the great work! 🎉

[@ErinTalksMoney]

Thank you so much!! 😊

[@maximumutility]

Also important is that 401(k)s can generally survive bankruptcy, due to ERISA protections. So, early withdrawal for emergencies that are so bad that they will lead to bankruptcy is also a bad idea.

[@c.lightning6815]

Yep did a withdrawal when my first child was born to pay off some monthly debt. Understand the math but still have no regrets. Peace of mind can be expensive.

[@12jacobmar]

My wife almost pulled from her 401k to pay off credit card debt. Luckily, she asked my thoughts on it and I shut that down quickly. We started a budget and plan to tackle the debt strategically. 🧐

[@kentonb-1]

While my first inclination is to agree with you, I can see a good mathematical argument to be made for an early withdrawal in your wife's situation. An early withdrawal will cost 10% in penalties plus about 10% in opportunity costs (growth of the account). If a credit card has an interest rate > 20%, it's mathematically better to withdraw early and pay off the cards. HOWEVER, this assumes that whatever behavior led to the credit card debt has been dealt with. Otherwise, it's a downward repetitive spiral.

[@utubewillyman]

@@kentonb-1 Definitely a case for a loan from her 401k, or a combination of a loan and withdrawal.

[@MrSupernova111]

@@kentonb-1 . Agreed. Although it sounds like the woman had room to cut other expenses and pay off the debt. We don't know if she had $1k, $10k, or $50k in debt. Its also possible to pay off one credit card with another using a low fixed rate. Many credit card companies offer such deals to have you transfer the balance to them.

[@williamcroom4482]

Disagree with the opportunity cost assessment of the commenter above. The opportunity cost of compounding is much higher than 10%. Cancel the credit card and pay with cash.

[@xaldath4265]

I'm so glad you two worked TOGETHER to get your finances in order rather than one of you making a decision that could have large negative consequences for both of you, even though the initial decision was meant in earnest.

[@hunnybunny4306]

While early withdrawls are generally bad, knowing you can withdraw funds early can be good. I know so many young people who don't contribute to retirement accounts because they think it'll be locked away until they're old. But there are many ways to withdraw funds penalty-free like Roth IRA contributions, Roth conversion ladder, and 72t. Instead, many invest in taxable accounts because they think that's the only way to have access to their money, which drastically reduces their wealth due to taxes.

[@xaldath4265]

This. It's generally advisable to avoid early withdrawals, but knowing they are possible is important, even if they come with penalties. So many misguided decisions made due to poor information. 😢

[@robotbaker5]

I have two coworkers nearing retirement age. Both were unemployed in 2008, and on hard times. One cut back on expenses and doubled down on odd jobs to make ends meet. They are financially ready to retire any time. The other cleared out their retirement, and is talking about ‘hopefully 10 more years’ 😬

[@dlg5485]

I too was laid off in 2008 and I couldn't buy a job for almost 2 years. I worked min wage jobs, but that was nowhere near enough to pay my core expenses, so I still blew thru my almost my entire savings. When I finally got a decent job (which still paid less than the job I lost) I started saving and investing aggressively. It is now 13 years later and I've accumulated 500k, and I expect to retire in 7 years at age 62, with around 1.3 million. I am very please with where I am, considering I started over from scratch at 42 and will still be able to retire comfortably at 62, barring a sustained market crash. Getting back on track after an unexpected career loss is difficult and stressful, but it is definitely doable if your priorities are straight and you can stomach an aggressive saving/investing strategy.

[@hansschotterradler3772]

I just turned 54, so I can start withdrawing money from my 401k in 7 weeks without penalty according to the rule of 55.

[@michaeltewes7833]

​@@hansschotterradler3772 But why??? You can use the miracle of compounding to continuously grow your savings accounts

[@heldogwash6087]

​I never heard of this, i thought you had to be 59 1/2 yrs old to start withdrawing​@@hansschotterradler3772

[@kentonb-1]

@@hansschotterradler3772 Yes, but remember you have to leave your job to do so!

[@donh8833]

With the penalties, an early withdrawal does hit you hard. Having a good emergency fund is the defense against desperation.

[@randolphh8005]

I agree WITHDRAWALS are an absolute last resort except to buy a home. LOANS we did twice from our 401Ks. In both cases it was a good move, we were able to pay off debt and then pay ourselves back with interest. We ended up at age 61 with no debt including no mortgage. We also still have adequate money in our portfolio. One of the issues was the limited investment options in our 401ks before we were able to covert to IRAs. I would have been much more reluctant to take money from the IRA.(I know a loan is not an option).

[@mikebridges20]

Erin, since I graduated in 1980, I've had car loans, home mortgages, credit cards, and one, ONE, 401K loan. Our first loan was the car loan, which we paid off just making the payments. The home mortgage was, well, normal, although we got it paid off in about 15 years. Credit card debt was paid off monthly, as many do (we only use debit cards now). But that 401k loan drove me crazy. I was always worried about a layoff or something else that could put me in a really bad bind. Not that having a loan doesn't add pressure, but at least if bad things happened I didn't to ALSO pay back the 401k loan in 60 days. We've been out of debt since we paid off our house in 2007, and will never go back.

[@Mazlem]

I consider all my retirement accounts as untouchable until retirement, including the HSA if at all possible, which I started specifically for health expenses in retirement.

[@BadPhD777]

VERY WISE!! You'll never regret this!

[@rshearer2]

I did both -- 401K Loan ... which I thought I was super smart with at the time --- "I am paying myself back!" ... but in retro - the market did so much better than my loan interest rate. I still think under stress of financial issues above an emergency fund - it might be an option. The idea is to keep the money inside a tax preferred account. But you always have to remember tomorrow they can fire you and you need to pay it back. If you could have ... would you have taken out the loan? -- And during one bad year - we did liquidate an IRA and pay the penalty. Again - today - I would have moved mountains to leave it on the other side of the wall in a tax preferred account. Life happens

[@JinX0011]

Yay - bloopers! More of this content!! 😆

[@kennethroyer9949]

The best financial advice is this: BE DAMN CAREFUL WHO YOU MARRY!

[@MrSupernova111]

You got that right!

[@waynewarner6838]

Indeed!

[@Link-we8so]

Best advice I ever got.

[@realchiragjain]

Erin, thanks for sharing this value. I am working as a video editor for the last 6 Years and found out that we can provide more value to your videos. We would love to collaborate with you. Thanks again for this value

[@zeldyrrolorin9962]

I think the best practices chapter was the most important part. Time in the market is the most important concept to remember. If you already crossed the first hurdle--investing in your 401K--then don't go backwards. There are other avenues to pursue to deal with a financial crisis.

[@x2bate]

We built a new home in 2017. The old home did not close for 30 days after the new residence. We paid for all construction overage OOP....tapped out there. We leveraged all the equity in the previous home, but remained REALLY tight at the first closing. A 30 loan from my SEP provided peace and harmony in our house! I will admit to being a little anxious until the 2nd closing was finalized. That is well beyond the risk I normally take with those funds.

[@williamcroom4482]

So your SEP IRA has a loan provision?

[@emerald640]

Remembered an article from years ago saying that you could come out ahead putting money n a IRA that would be coming out before 59 and 1/2 . The no tax on yearly gains and extra compound interest because of tax deferral would more than make up for the 10% penalty.

[@charletfoster8917]

Great video n ⚠️to not touch your retirement accounts, save💵for emergencies👍🏿

[@MLovesacoffee]

Great advice as always. I really love your videos and advice. I'm 64 so I care!

[@Travlinmo]

Constantly love the bloopers! Never touch retirement funds!

[@brycegardner6171]

We borrowed from my 401k to buy a house. The main reason was to avoid selling stocks in a brokerage account. We kept our investments outside the 401k intact and got the 401k loan which ended up working like a fixed interest investment in my 401k and enabled me to contribute the max to my 401k plus the loan payments. It's worked out well. The risk was that I would need to change jobs before the loan is paid off and, in that case, I'd take from now much larger brokerage account to pay back the loan. I really think there are valid reasons (wealth-building reasons) to take a 401k loan.

[@alangrawien103]

Great video Erin! As a younger person, I was not very financially savvy. My wife and I got pretty deep in debt with credit cards and our mortgage. Shortly after we bought our house, my wife left her factory job due to forced shift changes there. I ended up taking out a 401K loan to pay off the credit cards(which we have maintained well for the last 20 years now). The remainder of my financial burden didn't leave me with surplus income and I was no longer able to make contributions as well as paying off the loan to my 401k. This put me behind on my retirement goals for many years. Now I am 52 and we are saving 70% of our gross household income to be able to leave the workforce when I hit 59 1/2. It was a long hard road to recovery, but that loan is the trigger that made it happen.

[@ChintanCG]

Few years ago I was considering taking a 401k loan for a down payment on house. Thankfully decided against it and sold some of my stocks instead to conver the difference.. Great video

[@ld5714]

Good morning Erin. Good video and discussion on this very important topic. I agree with your analysis and observations. I must admit that I found it disheartening that such a high percentage of people had taken loans or withdrawals from their accounts. As a person who supported their household as the sole wage earner, I know all too well that life happens and circumstances and needs arise. I never took loans or money out of my accounts, the worse I did was stop funding them for a while when I needed to and that was bad enough. I don't mean this in a negative or condescending way, but think many do this out of their ignorance and true understanding of the impact of those actions on their future. I truly feel there is generally another way to address the current challenge you face. It was very difficult at times for me; I had to keep my perspective, use my knowlege and make wise financial decisions. Keep up the great content and I'll see you on the next one. Larry, Central Valley, Ca.

[@lkjacob1]

Hi Larry. It is disheartening because I really believe that the mentally of must have it now is the factor. I'm 61 and withdrew from my 401K back in 2000. It wasn't a large amount, `6k, to pay off my car loan after a divorce. I wasn't making a lot of money but was penalized but being free of my car loan made it so I could breathe. I haven't looked back and have never touched my 401s again and my balances show the power of compounding interest. Go me!!!!

[@ld5714]

@@lkjacob1 Agree.

[@stever7000]

I had an old 403B and later the chance to cash out a pension all totaled under 50K. Used it to invest in a rental property 12 years ago. Very satisfied with the decision

[@joelcorley3478]

I retired early. But I actually cashed out my first 401(k). I didn't need to - I just didn't know I should roll it over into an IRA. This was in '91 or '92. The company had only started providing a 401(k) plan the year before and I think I may have had $150 in when we parted ways. I learned better shortly after that and I've not made that mistake again. I have also taken out a 401(k) loan. I did it a week before I retired. I did it to provide cash for a remodel of the house before I sold it. I put the cash back several months later and it's still invested today. The remodel was well-timed and well-done and netted me a huge profit on the house.

[@AC-si1xb]

Thank you for all your help in providing the financial videos. If possible, could you please create a video explaining how to calculate fire costs and determining the point at which I should stop investing? Thank you in advance.

[@toranaga1969]

401(k) loans are paid back with after-tax money and when you pay it back into your 401k the principal is not taxable but the interest is taxable.

[@jjjmiah]

This is one of the smaller downsides that is missed in this conversation. Unless you take the loan entirely from after tax sources, you end up double taxed on the interest portion of the payment: once on your paycheck when you get the income that's going to be used for the interest payment, then once again when you pay taxes on the pre-tax money as you withdraw it from the account in the future

[@toranaga1969]

@@jjjmiah Generally, you can't use the source the loan funds come from. It is on a pro-rata basis and can sometimes include Roth money, you don't have a choice usually.

[@jar145022]

I do use 10k worth of it as loan to help with home improvements.

[@tleonard9693]

Do what you want with your money. If you need it for emergencies..get it! If you don't save it. To many people retire in there 60's and health might not be good ,so what are you gonna do with all your money. To many people are dying young..so someone else spends the money they work so hard to save. The moral of the story is live your best life, while you can. Whatever that entels 😊

[@EricaMeeee]

Entails. But, yeah.

[@jeffmorton5539]

Time is obviously a big element when it comes to investing. People rob themselves of the big element of time to compound growth.

[@couchwarrior7207]

Don't know if you have done video on HSA's. I have one. Retired and immediatley got a rare auto immune dicease that is wasting away my muscles. My medical so far in 2024 is 300k. I have a Medicare Advantage plan to make up the 20% that Medicare dosen't pay. My premiumn and out of pocket works out to about 800/month. Ouch. But using HSA for that so able to let 401K. Keep growing. That HSA will be exhausted in 3 years. Wished it had a larger balance so that gains would cover my cost. My savings order is. Employer match, 401, Roth IRA, Brokerage account than 529 if kids. Hopefully some thing left to buy food.😆 But I started early in my career and just did a little paper cut each paycheck and let time and compounding build up the balance. Good luck to all.

[@rosemarietownsend7887]

I don’t know if she said this but also if you take a loan from your work 401k then you quit or are terminated, the full loan amount is due immediately!

[@HHH-nv9xb]

I have never made an early withdraw but have made a loan from it a long time again. It was just like any loans, I paid it back per the schedule. I don't seem to remember what the reasons were. ????? Now I have withdrawn money to cover transition for house purchases where I am buying and selling (slight lag) from my IRA. Once I get the money from the sale, I deposited the money back in. It was all done within the time limit. So it was a short-term loan that I need, and I don't have to go through the bank.

[@bmurphy847]

I took a loan of $50K in 2008 to buy a foreclosed house. I thought the risk of missing a bull market was worth buying a house at a rock bottom price. The house has doubled in value since then, but market more than doubled. Also, the business was sold in 2016 and I had to repay $14K when I was laid off. That was a little scary at the time. Now the house is paid off. In the end, I am happy with the decision, but there is risk.

[@pedrozatravel]

I don't even consider my retirement accounts part of my budget. Once the money goes, it is like it is gone. Like I gave it away as a gift to someone else. One day when I turn 60 I figure it will be like a million dollar gift from me from 30 years ago.

[@HHH-nv9xb]

i needed a temporary loan when I purchased and sold my house at that sequence with a couple with lag time in between. I couldn't use the proceed of my house for the new house. I decline on getting a temporary loan from the bank. Instead, I took money out of an IRA account to pay for the new house. Once I got the proceed from the house that I sold, I deposited it back. All within the 60 days. It saved me hundreds $$$

[@atan1092]

Hi Erin. I like your straight hair better than the soft curls.

[@ken_in_atx9619]

Rule of 55 though. You can pull money out if you retire early.

[@rbkahuna8192]

I switched jobs a little over a year ago and I had this discussion with several friends and family over my 401k. I asked the same advice, cash it out, pay off all the debts and start fresh or roll it over to the new job? Overwhelmingly I got the same answer. Cash it out. Well, I went against the advice and rolled it over. Today, it’s up and up a lot. So I’m happy with the decision. I still have the debts, but I’m working on them. I guess time will tell. 😅

[@dlg5485]

I took a 403b loan to pay off student debt and it was the biggest investing related mistake I've ever made. My interest rate on the debt was high, but the stock market went on to have the most insane period of growth I've ever seen and my portfolio was too small to really benefit from it. The interest rate on the debt was relatively high, but the returns I missed out of were MUCH higher. Every since then, I've been in the NEVER take a savings plan loan camp, unless it is absolutely unavoidable...it's just not worth the potential loss of growth.

[@benjaminchaston7202]

HSA's are also a retirement account option if you're able to hold off and pay medical bills until 65 years old, however they also have a 20% penalty if you withdraw early and don't use it for medical, e.g. just withdrawing money out of your HSA to have more cash.

[@Bartonhockey08]

I have never and never plan to pull money out earlier than my retirement. Now, I did speak to someone recently that falls into the 51% who has tapped into the 401k. This person advised they quit their job in their 40’s, lived off of their 401k for a year and haven’t regretted the decision. The person’s justification is that their dad apparently passed away with $1mil and didn’t get to live life. While I have similar thoughts, I’d rather plan to live a long life than YOLO and be broken in retirement. Plus, I will just have my investments passed down to heirs.

[@seminolefantodd4736]

Writing as one who did do an early withdrawal from an IRA to pay for a biopsy of a concerning spot of my wife's right breast due to not having health insurance, be sure to keep all the medical billing records as you'll need them when filing your taxes to prevent having to pay a penalty.

[@buyerclub2]

First, I hope all is well now. I see you wrote IRA, not 401K, so I assume that was your only reitremen investment option. If so, yeah, I think you made the correct decision, assuming there was no other option to pay for the procedure.

[@LostInThe0zone]

At one time, I did borrow from my 401k. The money was used to pay my daughter's university tuition. I had not planned that years cash flow well and we were forced to make the tuition payment out of pocket. I had to take a student loan for the next year, so that problem solved. On the pluse side, this was 2009 and the 9% I paid back to myself that year was more than I would have made in the market. Fortunate timing. I was never in the position that I had to tap that source again and the account has brought me to a comfortable retirement.

[@hogroamer260]

I took a few loans on my 401K during my career, although it was taboo then. I considered it was better to pay interest to myself vs the bank and considered it diversity in my portfolio. Unlike the last 16 years, there were several large downturns. It's another 180° flip in mentality. Working people are looking for ways to take the money out and retired people are looking for ways to avoid RMD's. I was always a planning nerd, but not prepared for the flip of perspective.

[@x-train]

I foolishly made loans in my early 20s and when I lost my job back then, I withdrew from my 401k. To this day, that's the worst decision I've made. Now with my new job, I feel like I've started catching up but still got ways to go and haven't touched my 401 k and every year I increase my contribution

[@theduke7616]

Assuming it is for something you need and not a luxury item, I have no problem with a 401K loan. I've always kept a small emergency fund with the knowledge that I can borrow from my 401K for a large emergency. I prefer to put as much as possible into my 401K. I like the compounding growth of a 401K versus my money sitting in a savings account with virtually no interest. The great thing is that you might not have an emergency. If so, you now have MORE money in your 401K than you otherwise would. Even if I ultimately have an emergency, it may be years down the road. If I put $10K in my 401K and let it compound for 20 years, it's probably over $30K. If I have to take a 401K loan for $10K (which ultimately goes back too), I still have $20K MORE in my 401K than had I gone the savings account route for my emergency fund.

[@herb7877]

Well presented.

[@emeraldrhyme5634]

I just added to my dividend-paying stocks. $300,000 invested in $O gives $1,500 per month. I cannot use a 401(k) because I do not live in the USA.

[@rosemarietownsend7887]

The big con on a 401(k) loan is if you quit this job or are terminated you must repay the loan in full. Failure to do means it will be considered an early withdraw with full taxes at marginal rate on the full amount plus a penalty of 10%.

[@christiansailor2880]

Thanks, Erin!

[@matthewbattershell6352]

How does one know if their 401K is distributed properly ?

[@_winston_smith_]

Does the 51% include Roth conversions?

[@ibmtpx24]

Idea: tax-loss harvesting. When to do it, how to do it, and all the tips will be appreciated!

[@JDMLCO]

I took a loan from my 401K for a down payment on my primary home purchase 20 years ago. It caused a little stress knowing if I lost my job I would also have the loan repayment to worry about. The loan was paid off in five years, and I was very happy with the outcome -- although I hope to never do it again.

[@brianschanne6941]

2015 I left a job my 401k was only at 22k and got a check for 18. I then got my tax return taken and money taken out of my checks years later on owed taxes. In total I probably got 9k of the 22k. I then had to restart my 401k with a new company and did not do it until 2018. I just hit 100k in that account and always think how much that 22k would have compounded by now and where I could be it

[@FightingPaddys]

Took out early in career to put a down payment on my home. It was in 97 when the housing market was in a down turn. Wouldn't have been able to do without it. Was it difficult recouping? Yes, but don't regret it at all.

[@MewChung]

Thank you for this video! I can always understand concepts easily in your videos. Can you talk about scenarios that DOES make sense to withdraw early, especially using the 72t and avoiding the early withdrawal penalty? Some people have high 401k/IRA balances and will get hit hard with high taxes with RMD. Would it be ok to retire early and use 72t to reduce RMD and to partially fund early retirement? So many people are against early 401k withdrawals, but not many people discuss situations that it does make sense…

[@joethecomputerguy1]

From someone who lost a house to foreclosure in the financial crisis of 2008, I NEVER considered tapping my retirement account. What a stupid decision on that would have been. That money goes in and should NEVER come out until retirement when can be done tax free. It's protected in bankruptcy. The bank didn't want to negotiate so I walked away. I lost 100k on that but a lot less than if I held that house. Actually felt good to stick it to the bank for once. And my recovery of credit score only took a couple years. I have an 800+ score. But I never borrowed again from the bank nor will I. And still loving the bloopers.

[@bdeitur]

When you take a loan out (i.e. to help with a home down payment), doesn't the interest paid actually go to your own account balance so that you are basically improving your 401k return by the amount/rate of interest for for that loan?

[@whatsinanamethatthecaptive577]

In 2002 we got a $50K loan from our 401k to augment our mortgage to build our dream home. We paid ourselves back with 8% interest in about 18 months so it was relatively short term. I do remember being concerned about the opportunity loss at the time. But hopefully we minimized our risk of opportunity loss by paying it back in 18 months. I agree not to take a withdrawal though.

[@geneslodysko6150]

20 years ago I almost did to build a shed. I was lucky. My father-in-law explained to me the dangers and possible losses. Luckily he loaned the money to me for zero % interest. I didn’t like oweing him so that motivated me to work extra OT and we paid him off in 6-8 months

[@rolandosouffrain7957]

I took a 401k loan from my old job. I don't remember the terms. I paid it off but I will only do it again as a last resort 😢😢😢

[@glenn71144]

51% is alot. We don't know the circumstances someone had to take an early withdrawal. In my case I had to pay my divorce attorney during my highly contentious divorce.

[@heldogwash6087]

I had a friend who retired. Got all her benefits of retiring, and bought a farm, and died almost a year later. So i say enjoy life tomorrow is not promised. Just like Social Security, we are putting all of our money into it, for them to say it might not be around in the years to come. Not saying we dont need something to fall back on when we retire. But i have took out a loan from my 401k. And paid it back thru my employer.

[@chuckfoster1945]

It's easy to see this as a quick-fix to a money problem. Erin offers tremendous advice. Listen & Apply!!

[@alkatmsu]

I withdrew 5k 9 years ago, penalty free, for closing costs on a USDA home loan to buy my first home. Between payments and value growth, i now have 60k in equity. Well worth it!

[@EricaMeeee]

This assumes you have other money: stocks, savings. If you have none, but you work full time and still have debt, I think cashing out the retirement fund is fine! Especially, if you hadn't ever had an employer that offered a retirement plan before a few years ago (restaurant work).

[@petejohnson5594]

I am at full retirement age, and still working. And have enough for retirement. Therefore, I am pulling some out to pay off a lake home, pay for a daughter's wedding, etc. Just staying below the next tax bracket.. So once you meet your goal, and are past 59.5, that IRA becomes a stress reliever.

[@rarelycares8416]

I took a loan from my 401k in 1999 to help buy my house, got lucky because the market was down for a couple of years after. I was paying myself 7% interest and buying low while everyone else was losing value. Still would only do it for something that gains value like a home purchase.

[@thomaschambless4458]

I love your bloopers!

[@woodendoors9532]

Ringless wonder

[@MattASV]

Great info, but TV is too high.

[@Mazlem]

That's a whole other mistake many Americans make lol

[@TheNotimprezed]

I used $50k 401k loan for a home down payment. At the time there was about $500k in there. Now there is $1.2m. The loan didnt make me stop investing, it was just a better place to get the money from. I could have saved $50k instead, but that money would not have been earning any interest back then. Yes that money may miss out out compounding interest, but so does a savings account. The biggest downside/risk is if you lose or change jobs and need to immediately pay off the loan or trigger the penalties.

[@langhamp8912]

Eh, I just use my 401K as an unfortunate savings account for unemployment, sickness, etc... I look at it as a pre-tax savings plan, so when I'm unemployed my tax rate is zero, so pulling out money from my 401K is still lower than a savings account while employed. I do think that buying a vehicle against a 401K loan seems to be a way of buying a vehicle using pre-tax money. When you pay the vehicle back you're in a lower tax rate. Of course, I believe in not having a vehicle in the first place, and only taking public transportation/bicycling/walking!

[@Larry-d1c]

A lot of the people living paycheck to paycheck see the 401k employer match as something they can game the system to get. They contribute enough to get the match, then withdraw everything. They are not wrong to take advantage of the match. But they are, of course, missing the whole point.

[@drz400sy8]

Nope, have not ever taken any out. I have increased and decreased the percentage at times. I would also advise against zero interest purchases. They seem to give you false sense that it is not reducing how much you have to spend. I see people use 401k like a revolving credit. Try not to use it but cut back in spending if possible to pay a loan.

[@rarodocswb9019]

I tíos Money out during the 30% downturn in 2023 and it was a lucky break because it could have been lost anyways

[@Loadmaster-1970]

I have taken out 2 loans from my TSP over the years. One for $20K and once for $15K. Paid them back within the 5 years. I know it affects future growth however having 35 more more months to go to retire early, I'm sitting on over $900K in the TSP, it doesn't seem to have hurt me too bad.

[@fransinigiraldo4695]

This is such a timely video Erin. I’m considering a loan to pay off a higher interest rate HELOC I have that is 10.5%. The loan would be 9% and it will be paid w rental income in 4 years. Do you think that’s a good idea? Thanks for your feedback. 🙏🏼

[@kronsonfamily]

I took out a $50k 10yr loan for a down payment on my house. I technically still have 7 years left on the loan but I "paid it back" in about 18 months by contributing the max to my 401k. I figured I could always pay extra to my loan but I couldn't always go back and contribute the max for the year.

[@Dave-sw2dm]

I haven't looked because I no longer have children at home, but I sure hope there are channels for children on finances and saving and deferred gratification. I never understood having credit card debt, car debt, etc. Seems like our society just falls for all the "you desrve it" advertising.

[@BadPhD777]

The government keeps adding reasons to allow people to withdraw early, making it easier to put people even farther behind on their retirement accounts.

[@hanwagu9967]

Who'd have believed retirement accounts are meant for retirement. If you have a catastrophic situation, then of course all bets are off.

[@itchyisvegeta]

Moral of the story.... don't touch your retirement accounts if you aren't retired!!!!! Also, this college girl is adorable.

[@noveltyrobot]

Audience responding to your intro. "Hey Erin, what's up it's guys here".

[@ErinTalksMoney]

😂😂😂

[@garypeiffer1362]

I love the “Hey guys” opening, it is Erin’s signature startup to her videos. Don’t change it! If Erin every gets into merchandising, I see a lucrative opportunity in Erin shirts, hats, etc 😃

[@eplugplay8409]

My wife and I max out our 401K and Roth IRAs each year. we have 0 debt of any kind and a paid off mortgage. Also we fund 2 kids 529s a month and have 3 year worth of emergency fund earning 4.5% in a high interest account. In our mid to late 30s we are in great shape hoping to retire early is next plan.

[@jeffk3368]

Yeah y’all are doing extremely well. I got a few years to try to catch up with you. Good luck transitioning to early retirement when you hit that level

[@CM-bj8hr]

That’s like 60k a year in retirement savings, what kind of jobs do you both have? I’d love to be able to save that much.

[@Tialian]

42/35, max retirement, 1 yr emergency fund, 40k left on the house. Have you considered starting a brokerage account with some of your emergency fund so that money has more potential growth?

[@eplugplay8409]

@ almost 50% of that emergency fund is a brokerage in dividend ETFs and S&P index and tsla stock. Would be last resort to sell.

[@Tialian]

@@eplugplay8409 ah okay, I thought you had meant it was all in a HYSA.

[@ewinslow822]

Not even to pay off CC debt??

[@fredswartley9778]

This is a big mistake that I see a lot of people making. This is why it's important to have a sufficient emergency fund to help protect your investments.

[@simonramirez243]

Withdrew every bit from an account I had been giving to for 3 years … small mistake hopefully no issues Down the line

[@SuperAdRiCh7]

I plan to not touch my retirement until my retirement. I will do whatever I possibly can to earn more money than to rob my future self. As I continue to get older and look at the overall picture, I see people putting themselves in worse financial hardships than their actual situation. I understand that some people can't completely change their situations but most can... its just all about the decisions u choose to make! BTW, I'm a 40 yr old millennial if that helps😅

[@3dparagon]

And you may not be alive by the time you retire.. it is your money and why there should be restrictions and the chances that Social Security might not also be around (when our own government cannot control their own spending) seems foolish that they can have rules for us, but not for themselves.

[@kburkes4245]

Wages have not kept up. Hence younger people withdrawing from their retirement accounts. I don't think it's good, but you can hardly blame somebody needing to survive now, not 25 years from now.. The young people I know that have done this are not using it to buy Starbucks and guacamole toast. They are simply not earning enough to get by.

[@azeemsiddiqui4764]

You know what's interesting? I only need my Roth IRA to retire with enough to survive about 25 to 30 years. My 401k isn't Shariah compliant so this is nice. I was afraid I'd not have enough after hearing Jasprit Singh's video on just Roth not being enough.

[@brentkillian]

Stupid 23 year old me did it (withdrawal) luckily was only 1000 dollars

[@marybdunn6719]

With the cost of living, you're absolutely right we shouldn't be taking monies out of our account. But no one knew about the inflation that hit us all in these times. It is our hard earned money that we didn't know would be later on under such control of the federal government. Nobody wants to result to withdraw from our retirement, but things can happen in life so unexpectedly.

[@Meditations2024]

I *really* don't like "the (stock) market" as an investment tool myself, but I do understand why someone who doesn't create value themselves or doesn't know how to create value themselves would. It's super speculative, a game within the game of creating value in the real world. You think Warren Buffet ever created any value? He's just an extractor of value others have created... While it's absolutely not for everyone, investing in creating value yourself will almost always have the biggest return, assuming you have a good strategy. The free exchange of goods and services, in other words. The stock market is merely a medium for extracting value from people who have already done this at the end of the day.... Not everyone can be a good business owner or have a side hustle, mind you. Work is the thing which creates value. Improving things. Creating things others appreciate. If you're good at that, you'll be rich in no time...

[@derekhudson3462]

One thing that people who take a loan from their traditional 401k fail to realize is that they are paying taxes on that money twice. They are paying it back with after tax money, and are paying taxes on it again when they withdraw from it in retirement. Don’t do it.