As a Chartered Retirement Planning Counselor and someone who deals specifically with retirement issues I spend a lot of time helping participants with their retirement plans. One of the most common reasons participants would meet with me is because they say need money and they are looking to take it out of their retirement plan. Unfortunately, this conversation almost never goes over too well since they are usually upset with the fact that they cannot cash out their entire account while an active employee or can’t tap into the company match. It’s just as bad when I explain to those who are eligible for a distribution that they are likely going to lose 30% or more of their money to taxes.
What is probably more shocking is that many of the people coming in looking to take money out of their retirement plan only need a small amount (generally under $1,000) to cover some unexpected expenses and I’ve even seen people take out $500 loans on three year terms. With so many people tapping into their employer plans for minor emergencies I think this highlights the importance for keeping a cash emergency fund available even if it isn’t significant.
Congratulations on Saving for Retirement, but Your Responsibilities Don’t Stop There
I have to applaud those who actually take the time to enroll and begin contributing to their plan, especially if money is tight. Generally, the people who need to
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