1 in 4 401k's being raided for use on current expenses-WAPO article | TigerDroppings.com

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StrangeBrew
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Member since May 2009
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1 in 4 401k's being raided for use on current expenses-WAPO article



The only one benefiting is the plan administrator. More a case for means testing, which will again reward negative behavior.

quote:

More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.


quote:

“Encouraging or enabling people to spend down retirement money in anything other than the most severe circumstances is a terrible mistake,” said David C. John, a senior fellow at the Heritage Foundation who studies retirement policy.
401k Breach







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GoCrazyAuburn
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Member since Feb 2010
15632 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Not shocked at all. Clients call in all the time wanting to do this with their accounts (not just 401(k)'s). It is a terrible trend.





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weaglebeagle
Auburn Fan
Alabama
Member since Jan 2011
1385 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


I'm not shocked either. A family member had a "mid life crisis" of sorts and drained their 401k. They haven't contributed a dime since and are 50 years old right now.

I don't even consider my 401k as an option for anything unless it became the most severe of situations. Even then I'd think twice.

Plus a lot of the people I work with are paying back their 401ks right now. They think it's just a glorified savings account they can dip in to when they feel like it. There is a major lack of financial education in this country.



This post was edited on 1/15 at 3:00 pm


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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
57287 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Tex





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GoCrazyAuburn
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re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Huh?





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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
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re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Seems to me to be an income problem that just happens to lead to a retirement problem.





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GoCrazyAuburn
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re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Or just a spending problem.





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Vols&Shaft83
Georgia Tech Fan
Member since Dec 2012
18804 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


My mother did it, got killed. I wish she had to come to me first, I'd have given her the money if things were that bad.

But my mother is a financial retard, she was gonna a Pay Day loan to make sure she had enough money for Christmas, thank god I was there and had cash on hand.






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KG6
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Member since Aug 2009
2780 posts
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re: 1 in 4 401k's being raided for use on current expenses-WAPO article


quote:

I don't even consider my 401k as an option for anything unless it became the most severe of situations


This. And even in that situation, I would probably just reduce the contribution amount to help pay things off. I guess the only way I would ever spend money out of it is if somehow my wife and I both lost our jobs for 6+ months.






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Sigma
Michigan State Fan
Fairhope, AL
Member since Dec 2005
2215 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


quote:

I guess the only way I would ever spend money out of it is if somehow my wife and I both lost our jobs for 6+ months.


And even then I would work at McDonalds or bag groceries before I would cash in the 401k.






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jmtigers
Southern Miss Fan
1826.71 miles from USC
Member since Sep 2003
3643 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


quote:

And even then I would work at McDonalds or bag groceries before I would cash in the 401k.


This.






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GoCrazyAuburn
Auburn Fan
Staring up at Vulcan's ass
Member since Feb 2010
15632 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Man, why can't some of my clients be more like you guys





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buddhavista
Member since Jul 2012
3543 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


quote:

And even then I would work at McDonalds or bag groceries before I would cash in the 401k.


This.

pretty much this, although if I can't find a job in 6 months the economy is in really terrible shape. Unemployment in my industry is sub 5%, probably closer to 3%.

And honestly if you are only using your 401k for savings, you are going have a bad time.






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30534 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


I'll also note that probably most people in this situation don't have nearly enough saved to start with even if they didn't raid the account.





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StrangeBrew
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re: 1 in 4 401k's being raided for use on current expenses-WAPO article


Being chronically unemployed would ultimately lead me to withdraw, but it would only happen after I instituted an austerity program like no other.





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jso0003
Auburn Fan
Birmingham/Atlanta
Member since Jun 2009
4941 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


quote:

Man, why can't some of my clients be more like you guys


Well if they all spent their free time researching ways to obsessively save money and plan their personal financial futures they probably wouldn't need you!






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Cold Pizza
Ohio State Fan
Member since Sep 2011
7639 posts

re: 1 in 4 401k's being raided for use on current expenses-WAPO article


It's a stupid rule allowing you to borrow 401k money from your account without penalty. I was told one time the rule is there to encourage lower-income people to use 401k's. I don't believe it.

It's there for the benefit of plan administrators.






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