This Is The Worst Thing You Can Do With Your 401(k)!
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What Is a 401(k) Loan? And How Does It Work? –
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This Is The Worst Thing You Can Do With Your 401(k)!
Your 401(k) is a valuable tool for saving and investing for retirement. It offers tax advantages, potential employer matching contributions, and a range of investment options. However, there is one mistake that can severely derail your retirement savings and leave you in a financial bind.
The worst thing you can do with your 401(k) is to cash it out before reaching retirement age. This is known as a premature withdrawal or early distribution. While it may seem tempting to access the funds for immediate needs or desires, it can have serious consequences in the long run.
First and foremost, if you withdraw money from your 401(k) before the age of 59 ½, you will likely be subject to an early withdrawal penalty. This penalty is typically 10% of the amount withdrawn, in addition to any applicable income taxes. For example, if you withdraw $10,000, you will owe a penalty of $1,000 right off the bat.
Additionally, cashing out your 401(k) means missing out on the potential growth and compounding effect of your investments. The whole purpose of a retirement account is to accumulate wealth over time, taking advantage of compound interest and market returns. By withdrawing your funds early, you lose out on years, or even decades, of potential growth.
Furthermore, cashing out your 401(k) impairs your ability to meet your retirement savings goals. Retirement is a significant financial milestone, and the more you save, the better chance you have of enjoying a comfortable retirement. By taking money out of your 401(k), you are essentially robbing your future self of the financial security and freedom you’ve worked so hard to achieve.
It’s important to remember that your 401(k) is meant to be a long-term investment vehicle. It’s not a piggy bank to dip into whenever you need some extra cash. There are usually other options available to access funds in times of need, such as taking a loan from your 401(k) or exploring emergency savings.
If you find yourself in a financial bind and are tempted to cash out your 401(k), it’s crucial to explore alternative solutions. Consider speaking with a financial advisor who can help you explore other options, such as budgeting, cutting expenses, or finding additional income streams.
In conclusion, cashing out your 401(k) before retirement is the worst thing you can do with it. The penalties, taxes, and loss of potential growth can have a significant impact on your future financial well-being. It’s essential to think long-term and focus on building a solid retirement nest egg.
Wild haha people complain that they don't have enough money to put into a 401k but yet there Verizon bill is 200 a month haha.. get your self straight talk for 45 a month and invest that 150 a month to get started.
That sounds like quite a frustrating experience with these guys! Have you come across any other alternative savings strategies or platforms that seem more promising and reliable? I'm curious to hear your thoughts and any recommendations you might have for fellow viewers who are seeking safer ways to save and invest.
I didn't know this was even a thing. Folks would be better off NOT saving rather than dealing with Lendtable. I googled them while listening.
Oh my goodnesss, terrible idea! Terrible! Great job Ramsey show!
The 401k is good, because retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k. My mom retired with about 4.2 million, but my dad retired with roughly 1.8 million. So it really does.
But liberals support this I bet you
This ought to be illegal. Get back to the days of usury.
my investment advisor wants me to invest only in green technology even though the returns are less than i can get with regular companies, should i do it?
Jade is a real win. She has the same huge personality as Dave and is a gifted communicator. He's so good at bringing in talent.
I don't see the problem with that offer. Even if you're on the hook for all they loaned you, you still have the match the company put in. You will still end up above water.
Awesome chemistry between these two… She’s an great co-host.
This shouldn't even be legal
Sickening.
WOW she is pretty….
I see PODS is a sponsor. Never trust an “advisor” with long yellow fingernails.
Lol, 401k/403b are SALARY deductible plans, so unless this place gives you the money each pay cycle what prevents the person from, you know spending the money? Lol
Is there a way to invest in this company? This sounds like a great investment opportunity!
Jade: "if you leave your job…"
Dave correction: "When you leave your job…"
Jade, the past tense of lend is lent, not lended. At least in the sentence you spoke.
401K is the best program ever. These are scams trying to mess with you. Do your 401K the regular way.
Well barrowing off your 401K is stupid every time you do this. But I can see the benefit of a personal loan for one year to max out that 401K or perhaps max out an IRA. Then you make payments toward that. That way your balance will match your income by 30 if you are really young. So I guess this company exists because this is the only way to get around payroll deduction. I think you're better off maxing out an IRA and an HSA if the employer won't let you bring in money from your checking account. Then maybe find a deferred annuity. But again if I'm a financial adviser, I'd tell that person one year max and that's it.
This is another loan. You have to pay it back plus interest. Too many ways it can go sideways.
People blaming the crooks. Why not blame the parents that do NOT educate their kids.
Stupid knows no bounds
My job matches at 10%. But I put 25% in. That works perfect cause by December I’m hitting my max $22500.
This is insane! Buy less stuff! Sell stuff. Put money in the 401k.
How can people sleep at night knowing they are screwing over people
I can kind of understand people clicking phishing attempts on websites. But this one I don’t understand how can anyone fall for it. “Oh yes! Free money for me because they like me”
Very clever really. They know many people leave money on the table and this is how to get it.
To be clear it’s all silly and nobody should use it but I can see why some would.
Yep, I agree with Jade: don't let them cut off your middle fingers! You will need them later to express your own stupidity! LOL!
You can’t give money to your employer to contribute to your 401k. That’s not how it works. Contributions HAVE to come directly from your paycheck.
Still hating the player and the game.
The bottom line here is no one is more responsible for financial stupidity than the person in the mirror.
It's like being in the "Matrix" of foolishness.
Many will fight you to the death to give their money away, and they have the right to do so.
Can’t she get rid of the dead squirrel on her head? She is not kidding anyone.
Wow, that's really bad
I know a guy that cashed out 200k of his 401k near the bottom in 2022. He said he was tired of his account losing money and wanted to get more into real estate for better returns.
That is crazy.
Taking advantage of desperate people is the American way.
I’m speechless!
Sounds like mutual funds rather than index. Oh sorry, you guys push mutual funds.
The idea itself is a HUGE red flag. Without hearing any details of how they make money off you, it sounds predatory, simply because it sounds too good to be true.