For almost two decades we as a nation have saved between 1% and -1%. Is it surprising that, when difficulties arose, that there is no other recourse?
It’s not about not caring about the future, it’s about feeling more sure there won’t be one.
Huh? You mean withdrawing money to pay the mortgage is "I don't care about the future"?
On this topic it seems a little known fact is if you leave your job (quit OR fired) at age 55 or older, you may make withdrawals from your 401k at that firm WITH NO 10% PENALTY!
I state this not to advocate withdrawals but to make people aware they may be paying a penalty FOR NO REASON!!!
I even had this argument with this CPA broad in a bar. She kept saying no.. no.. no ..
So please refer to IRS Publication 575, and Form 5329 Instructions (line 2), to confirm this.
It does not apply to IRA’s and if your former employer’s plan made you roll it into one, you are screwed ... sorry.
Thanks for reading ...
...these are not “hardship withdrawals” but I-don’t-care-about-the-future withdrawals.”
Cavuto was interviewing a guy about this same issue this week and Cavuto doesn’t agree totally with your premise. I believe he said something to the effect that perhaps they don’t trust the future or that the money will be available later when they really do need it. He also raised the issue of the amount of tax these people are going to have to pay if they are under 59 1/2 which is substantial and makes little sense unless you are really in a bind financially. I wonder if they are concerned about the future why they don’t just stop further contributions if such is possible.
So, all that money you have saved for 20+, 30+ years will be GONE!
You are better off putting your extra money in a Passbook Savings account.
I had a 401K a long time ago in a previous employer, I no longer contribute to one for the past 5 years ... they are worthless.
The reason Americans have not saved is because we are taxed to death and hit with inflation. Some are taking money out of their 401k accounts now, because they think the government is going to confiscate the money. I would not be surprised.
Or maybe they're "get my money out before the democommies steal it" withdrawals.
People - the ones on the edge - and some further in - are starting to give up...
For those who can't do both, saving for a rainy day tops that big-screen TV or the pricey vacation or the car with all the luxury extras. To those who can't resist the latest goodies, I say, "Quit whining---no sympathy here."
I wouldn't be so quick to judge. Many early withdrawls are due to medical hardships, the need to reduce/eliminate one's debt, or the need to try and get one's head back above water or simply tread water, financially speaking.
In each case, it's a difficult decision to have to make due to the tax implications of each choice, and yes you do know that you're short-changing your future by having to make these choices.
This is the economy we live in, thank you Barack Hussein Obama (you sorry ass poc.)
After many years of trying, I had high risk pregnancies back to back. Used ALL my time through my emplower (plus nearly 3 weeks of unused vacation time that had rolled over) keeping my son inside. When my daughter came along, there was no time left.
We had plenty of money saved and next to nothing on credit cards. I went part-time to increase her chances of survival, since we had enough saved to make up the difference until I could get back on my feet. Then a series of disasters hit. My husband was injured at work and needed surgery, then my son needed surgery, and then my daughter was two months premature. By the time she was born, our bank account was nearly cleared out. We had 4 nest eggs when another $67K in bills landed in our lap.
Breaking those nest eggs was definitely a hardship withdrawal. We took those hits because we had no choice. We've been laboring under years of debt because additional medical bills just kept coming. I'm not complaining, I'm just pointing out that it's very possible that gainfully employed, frugal folks can still be struggling through no fault of their own.
Over two years ago, a friend of mine lost his job of 27 years as a top level IT exec at a bank. He sent out nearly 700 resumes, all across the country, looking for work. They, too, were frugal folks who saved, saved, saved. His wife went back to work full time, but after months of struggling to maintain their house, cars, kids in private school, life had to change. They cut every corner, hopeful that a new job for John was just around the corner. When he finally got a job, it was making $12 an hour, not the $120K they were used to, but it came with benefits.
The company decided to nix the project his group was working on because the market is so soft. He's back to unemployment again. And there went a nest egg while they hang on.
My husband and I have, collectively, about $180K in retirement savings. We no longer have anything set aside for college for our kids, definitely not enough to retire on, and less than $2K in our bank account. We pay out debts, take care of our babies, and don't ask anyone (especially the government) for anything. And we will be working until the day we die.
The first wave of foreclosures in 2008 were the folks who had little or nothing saved for a rainy day. The second wave - and it is coming - will be people who used up all their rainy day savings and their storms dragged them under.
R U joshin' me? Seriously, what is a family supposed to do after the 6 months of savings are gone, and the laid off parent still has not found anything??? Better use the retirement and 401K than come after YOUR money, no? And it beats the cardboard home under the freeway.
Don't be so insensitive. People are suffering.