Posted on 10/23/2007 10:05:33 AM PDT by Hydroshock
Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement plan providers say.
Many in the field expect more borrowing in 2008, as consumers struggle with tighter credit and potentially higher mortgage payments.
"I don't think it's a groundswell but it's enough to be noticed," said Rick Meigs, president of 401khelpcenter.com, which provides information on 401(k) plans.
Increased borrowing on 401(k)s could be because of the credit crunch and slumping housing prices. To be sure, the indications are preliminary; it's too early to say why it's happening, according to the Hartford Financial Services Group.
(Excerpt) Read more at chicagotribune.com ...
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Big mistake that will bite them later.
Sad.
Most will also expect their neighbor to foot the bill for their own indulgence.
Perhaps...but it’s probably better than ruining their credit. It depends how much, for how long, are they reducing expenses long term, etc...
Not to worry. Elect Hillarious and there won’t be any 401ks left once she has taken it all for the “better oggd” (miss spelled on porposie!)
It depends whether they change their behavior and/or won’t have to keep doing it. It’s probably better than foreclosure or ruined credit.
Unfortunately, they are right. Eventually, they cry for government help/bailout and every RINO and Dem candidate is supporting it (”helping overstreched americans”). Just be prepared: You will be paying for this.
I didn’t notice any, you know, data in the article. Just assertions about how borrowing has increased.
But many maybe most will not. They will keep spending.
Very true.
Are you, you know, questioning the veracity of the MSM!@!!??
MV
SOMe people treat their money like grasshoppers, they save for a rainy day. Some are ant and live for the moment. But some are locust, they run through everything around them.
I can borrow from my 401K at about 9% interest. At some point in the future, my house will be mostly paid for, and there won't be much benefit from the smaller amount of interest I'm paying on it, as far as tax consequences go. My monthly payment will consist more of principle, as compared to interest.
That's not the case today, but it's not all that far into the future, either.
So at some point I could borrow the last $50k or $100k from my 401k, pay off my house and own it free and clear (other than the ever-rising costs of taxes and insurance) and PAY MYSELF the 9% interest back into my 401k.
Lots of variations to this, but paying myself interest, in lieu of my mortgage company, doesn't seem like such a bad deal.
True. But if they're just prolonging the inevitable, by propping up a bad mortgage with their life savings, then it's just compounding a bad decision.
Jeez, people. Just don't buy more house than you can afford. It isn't brain surgery.
Look for these negative reports to gain more coverage and frequency as we do get nearer to the election.
Well over 90% of homeowners are unaffected by the mortgage problems which are pretty well limited to the sub-prime market.
Everybody knows that savings are for rainy days and sunny ones alike, personal decisions don’t always have public consequences.
“To be sure, the indications are preliminary; it’s too early to say why it’s happening”
My guess is that people overextended themselves on their McMansions and Lexuses.
Bernacke should have sucked it up and raised to point when he lowered. America would have hurt and these easy mortgage lenders would have dried up but the dollar would not be tanking and the economy would be better off strategically.
I saw a lot of posts above essentially looking down on these people going into their retirement funds. The thing is, if they don’t have money, they don’t have money. I don’t think it’s a matter of hostility. We burn each of them for 8 % or so Social Security and Medicaid/Medicaire tax, and then 15% to 25% for Federal taxes (assuming the lowest brackets) and then sales tax, property tax, fees. If they have kids and they care about them many homeschool or struggle to pay for a private school rather than having their lives ruined by the public school fiasco. Etc.
If you need the cash, you need the cash. Eating, paying the mortgage and having electricity next month versus retirement savings . . . not much of a choice.
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