Most young workers are treating retirement accounts like it’s an ATM

Personal Finance


Despite the prevalence of these early withdrawals, most younger investors (89 percent) are either somewhat or very confident that they will save enough to enjoy their retirement, the research shows.

They also should make sure they fully understand the impact of tapping retirement savings before age 59½. Early withdrawals from 401(k) plan accounts and IRAs — excluding Roth versions of both — are subject not only to regular income taxes, but also a 10 percent early withdrawal penalty unless you meet one of a few exclusions.

On top of the potential tax cost, you’re removing money intended to stay put so it can grow over several decades, experts say. In other words, when you withdraw, for example, $10,000, you’re taking out more than that amount — you also are eliminating all the potential earnings and interest it would earn over several decades.



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