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.

Source link

Products You May Like

Articles You May Like

Deutsche Bank reportedly ignored calls to report Trump transactions
WeWork has Q1 loss and says investors should see losses as investments
$2 billion from rockets last year, Jefferies estimate
JP Morgan buys InstaMed in JPM’s biggest deal since financial crisis
Deere shares slump after profit misses, and full-year profit and sales outlook is cut

Leave a Reply

Your email address will not be published. Required fields are marked *