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Would you take your retirement money to prep now??

6K views 69 replies 43 participants last post by  nadja 
#1 ·
I just lost my job a week ago and I would like some ideas from the group about my pension.

Here is the deal.

I have a pension that I and my former employer have contributed to. I can walk away with $12K after taxes/penalties or I can leave it and have $200/month in 25 years if the world, pension, state and me are still here and doing OK. This is not a traditional retirement account that will continue to grow over time it is a fixed amount that is based on my years of service.

I am young yet and should easily be able to replace this money if I chose to in the next few years. The older I get the less faith I have in IRA's and such. I think that a person is better off having a paid for house, the things they need and some good saving habits rather than depending on the government and economy to take care of them. We can talk about that latter.

My question is would you take the money and put it toward preps and such or leave it be? Now that I typed all this out I feel that I answered my own question. LOL... I would still like everyone's thoughts.

The only other thing that plays into this is that there is a chance that I could get my job back. If I do I will have lost that portion of my pention and would have to start over again. It's not that big of a deal since I will still have to work the min number of required years before I am old enough to draw.


Any thoughts anyone??

Thanks in advance.
 
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#2 ·
First, you should be able to roll it out of there and into an IRA without any penalty. You could roll it out into just about any type of security (even a bank savings account) that you designate as an IRA.

Now, if that is not something that you want to do, then my answer would be yes, yank it out, buy some preps (no more than 1/3 of the value) and the rest on gold and silver. You still need to preserve some wealth, if you want to call it that. For now, at least, you can sell off you gold and silver (for paper money) to purchase anything you may need. After the SHTF, you can still use it in whatever way your local market and economy is using it.
 
#5 ·
Thanks all

You are right about rolling it into a different retirement fund. It is an option but given the current economy, world event... I feel that preps would be better than money setting somewhere for the next 25 years.

I don't have any debt but I rent the house I am in. I would like to own it but is not possible at this time.

I have been storing up food and such but I would like to have another handgun and supplies as well as a couple more long guns.

I hadn't thought about gold and silver. Thanks for the ideas.
 
#11 ·
The older I get the less faith I have in IRA's and such. I think that a person is better off having a paid for house, the things they need and some good saving habits rather than depending on the government and economy to take care of them.
You couldn't be more correct with that statement! I was faced with a similar situation a few years ago, with almost exactly the same amount of money, and I pulled it and put it into my own investments. If you need preps get them. Just don't blow the whole thing in case you are not able to get another job right away, and need some cash to support yourself for the time being.

It's good that you don't have any debt. Do whatever it takes to keep it that way. I would look at putting away as much money as possible so you can buy a house or some property in the near future.

Paying rent is like throwing your money away. Even if you start off small at least you own it, and it will be one less major payment to worry about if times become tough. Or should I say, tougher then they are now.. and they will be.
 
#14 ·
Hmm...I wouldn't approach it so simplistically.

Questions to ask yourself:
1) Who is the issuer of the annuity, and do you trust them to be around? Is the annuity subject to any federal guarantees?
2) What is the net present value of the $200 annuity over the rest of your life, at a conservative rate? How does that compare to the lump sum?
3) Do you have any debt (you've said no). If so, take the money and pay the debt.

Based on the above, you'll have your answer. If the answer is the annuity, you can always buy $200/month of preparations for the rest of your life. If there is no federal guarantee, I think asking yourself about the financial viability of any institution is a genuine question these days, regardless of ratings.
 
#16 ·
There are various federal guarantees that could apply, depending on the structure, although if it is a straight annuity then it is probably not. The only way for him to find out is to ask his plan administrator. And--trust me on this--the federal government will be around to guarantee anything, and it will always have a limitless supply of dollars to do so. The question will be how much inflation there is, how much those dollars are worth, and how much that $200 will buy in the future. Even if the economy does not melt down, $200 a month would be worth little 30 years from now.
 
#17 ·
What's the penalty for pulling it out?

You don't have a job right now. So techincally you're temporarily retired.

something is anything for retirement, but 12 grand isn't that much. Do you have spouse that's employed? Buying prep with this money is a good idea. It's not money wasted, it's still things you use everyday. 3k in food can go a long long way if spent carefully. I would keep the rest for your daily expenses like rent until you find work again. Even without any big event, in a few months grocery prices will likely increase 30% plus. It's a bad year all around and USA farmer took a bad hit in crop damages in 2008.

Spend the time looking the newspapers for deals on non-perishable items. If you have a firearm or two and atleast 500 rounds minimum, wouldnt even go near a gun shop. You could use more, but you got more than most out there.
 
#21 ·
What's the penalty for pulling it out?

Tax and penalty = 30% lost.
I would walk with $12K+.


While I believe in saving for ones old age I am no longer sold on the idea of goverment and business guaranteed ways of doing it. I look at all the people in this country that were going to retire or did retire and now can't make it with out goverment handouts and being dependent on others.

It does me no good to have a piece of paper saying I will have XXXX dollars available to me in 25 years if I can't survive until then. There is also no guarantee that the money will be there even if I am.

I think it best for me to take this opportunity to withdraw the money, strengthen my supplies and have cash on hand to get my family through this time of unemployment. I will be able to take control of the little money that is there and save, reinvest or waste it as I see fit. I would rather lose it myself and have no one to blame than trust in the all knowing goverment to take care of it for me. They have there hands full running Social Security into the ground.

Thanks again for all your imput. I'm glad to see I'm not the only nut out there with strange ideas.:D:
 
#22 ·
Only way I would consider it is if I didn't have a good retreat property and cashing out some or all of it would buy me a good piece of property FREE AND CLEAR.

To pull money out of retirement to buy more beans and bullets- no I don't think so.

For about $.70 a day you can put together a decent basic year supply of food. Even unemployed you can find a way to afford that.

I've been preparing since 1986, I've seen and known a lot of guys that cut their future short for the present, everyone of them has regretted it.

Slow and steady wins the race, the S is NOT hitting the fan tomorrow... It may FEEL LIKE THAT to some of us, but it isn't going to. Make your preps CONSISTENTLY and you won't get behind and feel a need to rush to catch up.

Slow and steady wins the race!
Lowdown3
 
#25 ·
Thank you for your advice. As Im sure you notice you are the first to post against taking the money out.

I truly understand what you are saying and I would agree with you if my wife and kids were better prepared for. We have set aside some food, soap, meds, clothes.... but it will not last long and even shorter if I'm not working. The other reasons that I am leaning toward taking the money is that it is not a large amount of money, I am young and have a lot of time to replace it, it will not grow in the next 25 years and it may be gone in a year or two anyway.

The money that I am supposed to have in 25 years will be approx $200/month. When I think about how much money $200 was 25 years ago compared to today it doesn't seem like it will be a lot of money in the future.

Just my thoughts.
 
#23 ·
I don't know your complete situation, but I do know that if you do not work the rest of the year, and your spouse does not work, or does not make much, that $20k will not be taxed.

I had a similar situation many years ago. I left my job a few months into the year and then withdrew my 401k. I received 90% of the money and did not work the rest of the year. When I filed my taxes, I did not owe any tax for the year, and in fact got a small refund (from the 3 months of work done at the beginning of the year where taxes were removed.) If you have children, you could even earn EIC. $20k and two people or more is below taxable level.

Just a thought.
 
#24 ·
Thanks for the info. I will have to look into the tax part of it a little more since my wife does not work and there is no other income at this time. From what the company that manages the account told me there is a 10% early withdraw fee and 20% in taxes since the money was saved pretax. More research I guess.
 
#27 ·
Yes I do.

If I would have stayed employed with the same company for the next 25 years it would have built up to 85% of what I earned in a year. Without the next 25 years of service its not much.

Like I said before this is not a lot of money.
 
#28 ·
Don't be fooled by financial planners into this "buy and hold forever" mantra. It's a bunch of BS.

You CAN use a Roth and make your OWN buying and selling decisions. Think about it like normal life-

You might not buy that new Toyota for $18K, but if you found it marked down to $12K, it would be a decent deal. Same with mutual funds. Buy when the market is down, set a REALISTIC goal (i.e, 5-10%) of growth and hold it till then and SELL. Put the proceeds into a money market fund that you will transfer buying and selling money from.

But that's "Market timing" and that's the most evil thing to a financial advisor!! :eek: Sure it is, and you WILL take a hit every so often, especially if you go into it without any decent knowledge or let your emotions carry you away.

Example- some Asia Pacific funds that were trading in the range of $12- 15. for several years can now be had for around $6.50 NAV. A 10% gain on $6.50 is only .65 a share, not much, but if you have $10K invested in that fund and it moves 10% in a few months, you just $1000. doing relatively nothing.

"Oh but that's impossible, especially in this market blah blah blah.." Well I've done it several times since September. Last one was a small cap fund bought December 1st, sold December 31st for a 9% gain in that time period. I've tracked this fund and owned in numerous times in the last 6 years. I wouldn't buy into it without having worked with it before. It usually trades in the $13. to 17. range. At $8.60 it was a bargain that offloaded 30 days later for a decent gain. If I would have "bought and held forever" as the common mantra is, it would now be pretty much back to even on it.

Watch the market, track 2-4 funds for about a year, figure their highs and lows and buy close to a low. If the lowest it's got in that time period is $5.50 and it's run up to $8.00 If you can buy it at $5.70 and off load it later at $6.30 so be it, sell it and cash out. Sit it out for a bit and watch for another low to buy it back. Some funds do have 30 day redemption fees so ask that upfront.

Now you WILL get stuck at some point in time. I have a couple times before. Your options are to wait for the market to go back up or to try to recapture the money other ways.

Example- I'm "stuck" in an overseas fund bought late in 07 for $12.09 It had been running $14. or more for years. I bought when the market was down (for then), luckily I don't own much of it :eek:: Anyways, the fund is now around $7.00 I've "made" back most of the money I've "lost" (In reality I haven't sold it yet so I haven't really "lost" yet) in other trades. Or I could just "hold" that fund at $12.09 in hopes that someday those shares will be worth that much again.

Most 401K's just offer a couple of investment "options" and usually limit how many changes you can make. I don't have a 401K but my son's 529 is set up that same way. Shoot for a Roth IRA that you can direct yourself. Even the 2-3% you'll make having it parked in a money market is better than losing 50% of it in funds "bought and held" for the long term.

There IS opportunities out there, you just have to research them well and be willing to take some risks.
 
#30 ·
:D:You mean that one has to be personally responsible for themselves as well as invest time and energy to be successful?? Where did this idea come from?? I was hoping to send my money in and someday and when the government/company says I can quit working I would retire.:D:

I understand what you are saying and I know that I have options other than leave it or spend it. I have a small Roth IRA already.

I have not spent the time or energy to learn how to pick, buy and sell funds on my own. I can see the benefit of doing this but it has not been a high priority in my life. In the future I will learn more about these things but at this time my concerns are for the physical needs and safety of my family. I wish that I knew how to be more successful at investing but that is something that I will have to learn latter.
 
#37 ·
They MAY do that. And not to be rude, but I've heard that we are on the "verge" of an economic collapse since 1987.

The money you investment in a retirement plan is for if TS does NOT HTF, which has a higher probability. And no I'm not a pollyanna that thinks nothing will happen, I'm just saying that good preparedness means prepared for the BAD times as well as the GOOD times.

If you play out your plans you'll end up having land and home that you actually own, little or no debt, food to eat, AE system so no power bills, gardens and orchards producing fresh food, side income stream going, etc. That's my REAL retirement plan. If nothing serious ever does happen, I'll have LITTLE EXPENSES (with the self sufficiency aspects) and whatever money from the retirement plan will just go further not having to buy as much food, pay a power bill, pay a mortgage, etc. :thumb:
 
#32 ·
#33 ·
My retirement is for when I cannot work anymore, meaning if I get injured or decrepid. If I didn't have a child and a good deal of assets it would be different but I do so I need to be able to take care of those. Who knows if I will suddenly not be able to work.

If I now lost my job I would be search for more employment or looking in the area to see what services are needed and start a new business. An old high school friend of mine lost his job in GM and started listening to the people around him. He found out that many older people wanted their woods cleaned up but couldn't afford a forester. He did the cleaning for a much smaller fee than professional forester and then sold the wood for firewood. He also does extra work cleaning up a beauty parlor and will do tassle removal in the summer. The jobs aren't what he use to have but he found employment and keeps his assets safe for his family's future.

I guess if it were me I'd do what I could until I couldn't anymore and then I'd have something to fall back on. Live on less, work where I could, know that as bad as I think today is, there is always a chance tomorrow could be worse and I might need something to fall back on.

blt
 
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