I have always feared that since your 401K is tax deferred and that not only have you not been taxed, it is money that you have not even got yet. It is just a number of a piece of paper, and not very liquid. Once Congress decides it needs a way to fund Social Security in the future as Baby Boomers move in the retired category, I always felt that they would Nationalize 401Ks and give me some bogus enhanced Social Security in exchange. Since many Americans may not even have a 401K of any size, this may not be hard to sell to voters.
They would have to also announce a moratorium on withdrawals, because the moment it looks like it will happen, everyone will withdraw all their money, penalty or not.
I think you nailed it. That is why I took the money and paid the tax. It’s no longer a vulnerability for me. My main retirement plan was to own my home free and clear in a place with very, VERY low property taxes and no taxes on my SS. It’s why I moved from Seattle to KY.
I made almost the maximum that can be SS taxed for a very long time, and even surpassed the maximum a couple of years. So the payout is significant, and my wife’s payout will be half that (we both turn 66 in a few months). And now I live in a place where my annual property taxes are one month’s payment on a Toyota Corolla. When savings are applied to the payoff of my home and 32 acres, well, we’re looking at living almost for free. Factor in the garden, chickens, cows (if necessary) and it is even better.
Interestingly, the only things we really want to do is enjoy our property, do a lot of road trips around the country, visit with friends and, eventually die. We’re good! And we love where we live like never before in our entire lives. Kentucky is very beautiful and has a great climate - but you need bug spray.