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Stop borrowing from your 401(k)

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#81 ·
TonyRUS said:
Wow. So sorry to be so blunt, but I cannot believe the 'head-in-the-sand' naiveté being expressed here. Don't you read the honest economists of our day, like Peter Schiff, James Rickards, and sites like ZeroHedge , Alt-Market, etc.? If your 401k is in the stock market, in US dollars, you are about to lose half if not 70% of it-- before the 'correction' is all said and done. And you guys are talking about borrowing and paying back, how you're going to spend it 20, 30 years from now? If you don't believe this, you have not read and you are not listening to the truth tellers.
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This HAS to be a joke.

Please tell me you're not serious.
 
#82 ·
pmcjuryny said:
If the fed or the government are going to nationalize your 401k, ira, etc why wouldn't they nationalize your bank account as well? Short of keeping all of your retirement funds in your house, it could all be confiscated, hell even in your house it could all be confiscated or made worthless with the stroke of a pen.

Investing is making a risk vs rewards decision, generally speaking the stock market is a very safe bet in the long term.
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They're going to nationalize retirement accounts after a huge bubble bursts. They'll have guaranteed ROI to "protect everyone's retirement"

They would never try to get into people's bank accounts it's to sketchy.
 
#84 ·
HL431 said:
Explain how this is going to work.

Let me explain something to you ... the government LOVES the 401k/IRA as is. They DID create it, you know. They were created to provide a constant, permanent REVENUE STREAM.

The government LOVES every fool who withdraws early ... it's an automatic 10% windfall for the tax coffers. Oh, and usually kicks the person up a bracket as the amount is taxed as income in that year .... MORE windfall.

You are REQUIRED to begin withdrawing your funds at age 70 1/2 whether you need them or not. (And recently Vanguard Group one of the largest IRA/401k fund providers released a report that showed that 20% of folks making their required withdrawals simply put the money in a taxable account) So you MUST begin withdrawals hence taxation equals REVENUE.

Aunt Bessie dies and leaves you her IRA? GREAT ... for the government. YOU must now begin taking minimum withdrawals based on your life expectancy. REVENUE. Oh, and in states with an inheritance tax you owe that too on the entire amount. (in Pa for an aunt leaving to a nephew it's 15%) REVENUE

The first generation of folks who have nothing other than a 401k or IRA haven't even begun to retire yet. Wait until they do.

There are many who claim "wall street" OWNS and RUNS the "government". So PLEASE explain to me who this "owned" government is suddenly going to up and act in a way that will destroy "wall street" overnight? I'd like to know.

The Congress has undeniably turned to the right in the last two elections. SHOW ME any sentiment toward "confiscation" of PRIVATE retirement accounts.

In 2009 there was a Supermajority of Democrats in Congress and the Presidency. They couldn't even muster the votes to let a TEMPORARY income tax cut EXPIRE. A cut that affected 5% of the populace .... the most hated, reviled, evil "rich".

And YOU think the votes exist to CONFISCATE private accounts? Come on. THEY have these accounts. Their families have these accounts. Their supporters and financiers have these accounts. Use your head.

Some of you folks just type to hear yourselves type ... with NO thought behind the keystrokes. Certainly no logic of any kind.
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I honestly hope that you're right. The truth is nobody knows what's actually going to happen. But, what bothers me is that however unlikely it is to happen there's always the REAL possibilty that it can happen. When I have a significant amount of my life savings invested in a program that can be controlled by other people it gives me an uncomfortable feeling that I'd rather not have.
 
#85 ·
spameggsbaconandspam said:
Cool. What's your plan for retirement income? :D:
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You wait for the right time and invest in something that YOU have more control over. Sure you're going to take a hit on taxes and early withdrawal fees but aren't you going to be paying the taxes in the long run anyway? Take the money out, start a business or invest in the the stock market in individual stocks that you can control instead of mutual funds or index funds.
 
#86 ·
spameggsbaconandspam said:
Cool. What's your plan for retirement income?

So is having multiple diversified tax advantaged accounts, multiple non tax advantaged investment accounts and 3 income streams at our age putting all our eggs in one basket?

Why is this community so against saving and investing money for retirement? Is it ignorance? Fear of the unknown? What I frequently read is: "I don't trust the market, it's all rigged or the government is just going to take it anyway..." but what I think I actually see when I read between the lines in many cases is people that are trying to justify their decisions and looking for approval from others that have made the same decisions. When it comes down to it I could not care less what anyone here does with their money or lack thereof, just don't come asking for mine in 20 years. Feel free to call me the idiot but I doubt I'm going to regret having substantial retirement savings when I'm older. Go ahead and live for today if you wish, I have my plans in place. Oh well, in the mean time I'll be one of the folks here that debunks frequently repeated myths and inaccuracies. :D:
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We are doing that thing 20 years down the line. No retirement accounts as we kept our savings in privately held stock, a primary residence, tangible goods, tools and skills. We relocated to a new home in a wonderful location with 10 acres, nice home, barn and pasture for the horses (keep the wife happy), small garden and fruit trees, and near enough to the ski area to keep me happy.

We did take the equity and about 7-8% of our retirement to cash out our new property so we are mortgage free. I'll be the first to say having healthy retirement savings that pays good dividends along with our supplemental government income gives great comfort. Still getting set up but riding with my wife occasionally and both of us skiing helps keep us fit along with our other activities.

Bottom line is having a healthy retirement savings has and continues of give us comfort and happiness. Having good preps gives us the security that if something goes bad we have ourselves covered for at least a year if not more.
 
#87 ·
What is

FICA then? From investopedia-- "A U.S. law requiring a deduction from paychecks and income that goes toward the Social Security program and Medicare. Both employees and employers are responsible for sharing the FICA payments."

Read more: http://www.investopedia.com/terms/f/fica.asp#ixzz3h2zPRXlS
Follow us: @Investopedia on Twitter



HL431 said:
You never "paid into SS". You paid an income tax. There is no "return" on a tax you paid in.

This has been covered ad nauseum in here. The SCOTUS ruled on this decades ago. Look it up. Neither you, me nor anyone else has any RIGHT to any payments ... they are paid out at the whim of Congress and can be changed, altered, eliminated at any time.

The rules determining what you "get" can be changed at any time too as they were for many of us in the 1983 Revisions. As they will soon again.
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Discussion starter · #88 ·
spameggsbaconandspam said:
Cool. What's your plan for retirement income?

So is having multiple diversified tax advantaged accounts, multiple non tax advantaged investment accounts and 3 income streams at our age putting all our eggs in one basket?

Why is this community so against saving and investing money for retirement? Is it ignorance? Fear of the unknown? What I frequently read is: "I don't trust the market, it's all rigged or the government is just going to take it anyway..." but what I think I actually see when I read between the lines in many cases is people that are trying to justify their decisions and looking for approval from others that have made the same decisions. When it comes down to it I could not care less what anyone here does with their money or lack thereof, just don't come asking for mine in 20 years. Feel free to call me the idiot but I doubt I'm going to regret having substantial retirement savings when I'm older. Go ahead and live for today if you wish, I have my plans in place. Oh well, in the mean time I'll be one of the folks here that debunks frequently repeated myths and inaccuracies. :D:
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Well, I just wrote about that in my previous post. I have a friend who just retired who was not financially ready. She could get by just fine but her housing expense is getting the best of her income. I also have another friend who is getting close to retirement. Sure she has a pension from a previous job but she pays rent as well. If you have no debt and own your house, then your cost of living is not going to be very much. As I mentioned, staying healthy is very important in my opinion like: exercising, eating right, not smoking and limiting alcohol consumption. All of this prevents health problems as we age which can be very costly. As I mentioned, I would rather place my money in hard assets that I can physically see rather than theoretical money (digital currency) on a computer in a some 401k or pension account. And my question to you: what is your plan for retirement income if the SHTF and your 401K or pension gets completely wiped out in the next big financial crash?
 
#89 ·
katielyn said:
besides being fundamentally immoral requiring a captive group to contribute the notion you're getting a fair return is ludicrous when the returns since the 70s have already been pointed at as advertisements for 401ks in this thread.

Returns on monies I have paid into SS will in no now way exceed those I could achieve myself without the government's help. And then I could leave an inheritance.
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Fundamentally immoral? What a load of rubbish.

Are you somehow under the impression that the money will receive from SS is yours? If so, you are sadly mistaken. SS is a social safety net to assist with those who have reached retirement age. Are you familiar with Ida May Fuller? She was the first SS recipient. She paid in $24 to the SS trust fund over the course of her last three working years. She got back almost $23k. And you think that was her return?
 
#90 ·
Greta said:
There is more to preparing for retirement than just having digital currency in a 401K or pension account for example: having no debt what-so-ever, learning to live a simple life with less money, trying to stay physically fit and healthy, and having more hard assets. I suppose if you have long term confidence in paper currencies and the US dollar, then I say go for it. However, I don't have that kind of confidence so personally I am looking for those "alternative" retirement investments. I certainly would not put all my eggs in one basket like a 401k account.

I had a 401K account at a job I left right before the financial crash. When I left I took the money out. One lady I worked with told me that was not a good idea. My response was: "I have a premonition" halfway joking. Not long after, there was a major crash like nothing I have ever seen. Sure I got penalized but I at least had money that I would probably lost (like so many of them did) and I was able to pay off my school loan. So I don't regret one bit taking the money out.
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And if you had left the money in, you would be much further ahead today.
 
#91 ·
TonyRUS said:
Wow. So sorry to be so blunt, but I cannot believe the 'head-in-the-sand' naiveté being expressed here. Don't you read the honest economists of our day, like Peter Schiff, James Rickards, and sites like ZeroHedge , Alt-Market, etc.? If your 401k is in the stock market, in US dollars, you are about to lose half if not 70% of it-- before the 'correction' is all said and done. And you guys are talking about borrowing and paying back, how you're going to spend it 20, 30 years from now? If you don't believe this, you have not read and you are not listening to the truth tellers.
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Is this sarcasm? I hope so.
 
#92 ·
katielyn said:
FICA then? From investopedia-- "A U.S. law requiring a deduction from paychecks and income that goes toward the Social Security program and Medicare. Both employees and employers are responsible for sharing the FICA payments."

Read more: http://www.investopedia.com/terms/f/fica.asp#ixzz3h2zPRXlS
Follow us: @Investopedia on Twitter
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You don't seem to understand. You are stating it like you and your employer paid into a bank account for you. That is not how it has ever worked. You pay into the fund and the fund commits to pay you something during your retirement years. Everyone pays into one giant pot.

If you want a retirement account that is yours, do a 401k or IRA or even just do a savings account.
 
Discussion starter · #93 ·
dcporlando said:
And if you had left the money in, you would be much further ahead today.
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NO, I would have lost most of that money like many of the other people I knew in the financial crash. Also, I don't have enough confidence in these people who manage the 401k accounts. Money has no value whatsoever unless you can access it and use it to buy stuff when you need it. That is my big problem I see with the pension and 401k accounts. For the most part, it is out of my control besides getting a statement showing some figures. I have a family member who recently passed away at 57 of sudden cardiac arrest. As far as I know, he did not have any health problems. His retirement account is not doing him any good right now. Life is short and then we die. I am not going to stress out about whether I have a 401k or pension account.
 
#94 ·
Greta said:
NO, I would have lost most of that money like many of the other people I knew in the financial crash. Also, I don't have enough confidence in these people who manage the 401k accounts. Money has no value whatsoever unless you can access it and use it to buy stuff when you need it. That is my big problem I see with the pension and 401k accounts. For the most part, it is out of my control besides getting a statement showing some figures. I have a family member who recently passed away at 57 of sudden cardiac arrest. As far as I know, he did not have any health problems. His retirement account is not doing him any good right now. Life is short and then we die. I am not going to stress out about whether I have a 401k or pension account.
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Where was the market when you took it out? It is most assuredly higher today.

Why do people think they have lost money in the market if they didn't sell? You only lost money if the stock you invested in folded or if you sold. You told us you sold and paid taxes and a penalty. You lost out on all the gains you would have seen.
 
#95 ·
Greta said:
NO, I would have lost most of that money like many of the other people I knew in the financial crash. Also, I don't have enough confidence in these people who manage the 401k accounts. Money has no value whatsoever unless you can access it and use it to buy stuff when you need it. That is my big problem I see with the pension and 401k accounts. For the most part, it is out of my control besides getting a statement showing some figures. I have a family member who recently passed away at 57 of sudden cardiac arrest. As far as I know, he did not have any health problems. His retirement account is not doing him any good right now. Life is short and then we die. I am not going to stress out about whether I have a 401k or pension account.
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It sounds like you've made your choice. You don't lose anything until you have REALIZED LOSSES. Nobody invested in index funds lost money from 2008-2015 unless they cashed out when the market took a temporary downturn and then never got back in. Indexes were up something like 23% in 2013 so you'd be up quite a bit had you not panicked and got out. I'm a firm believer in not sitting around fretting about whether the sky will fall or not. We remember to live life daily, not fear it and yet we still focus on producing capital so that we can leave something to our heirs. Despite whatever the common mindset is here, there is most certainly a real issue with people not saving and investing enough for retirement. That is going to be a very real SHTF situation for many, much more so than this "what if" of the US government confiscating everyone's retirements, including that of the congressman that would have to pass that vote.
 
#96 ·
I don't know why there can't be a middle ground here. It is fairly obvious to me that tax deferred and matching (to whatever degree) is a no brainer even if the government were to declare half of it theirs at a future date.

But it is also simply ignorant to claim you lose this or that by withdrawing your money now. The account is tax deferred not tax free. If you take your money out to payoff your home or to start a business and it beats market returns how is that a losing trade?

To assume people in fly-over-country are a bunch of hicks will not serve you well but the reverse is also true; recognize a good deal when you see it and for now a 401k is a good deal. But not to think a better use might be available to some folks is plain stupid.
 
#97 ·
Greta said:
NO, I would have lost most of that money like many of the other people I knew in the financial crash.
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Were you (and they) in ultra-leveraged funds heavy into real estate or something? Because if you were in index funds, you'd have more than made your money back by now.

Also, I don't have enough confidence in these people who manage the 401k accounts.
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So, uh... you don't trust yourself? As long as you buy quality funds (e.g. Vanguard or Fidelity) with low expense ratios, you're ok.

Money has no value whatsoever unless you can access it and use it to buy stuff when you need it.
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So, you're not a big fan of investing for the long term. Would you also eat your seed corn in a SHTF scenario? Because that's the farming equivalent of looting your retirement accounts to pay off student loans.

That is my big problem I see with the pension and 401k accounts. For the most part, it is out of my control besides getting a statement showing some figures.
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If you're that uninvolved in your 401k... I can't fathom it. It's not some magical piggy bank that you put money into mindlessly and hope for the best. You get to pick which funds you contribute to and how much of each you hold. Are you using the term '401k' as a catch-all to refer to any and all retirement-related accounts?
 
#98 ·
TachMed said:
I have borrowed from my 401. The payments back come from my check before I get it. The interest is also taken out. Both go straight to my 401 account. The interest I pay back to myself actually is more than what the account makes on its own. So with my regular contributions, loan payments and interest I am actually making more in my 401 than I would had I not taken the loan.

Besides, I might as well use it before the Fed comes and takes it.
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Excuse me? You are paying interest that someone else might otherwise pay, no?
 
Discussion starter · #100 ·
dcporlando said:
Where was the market when you took it out? It is most assuredly higher today.

Why do people think they have lost money in the market if they didn't sell? You only lost money if the stock you invested in folded or if you sold. You told us you sold and paid taxes and a penalty. You lost out on all the gains you would have seen.
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I already said this in my previous post. It was before the great financial crash of 2008. Other people I was working with lost thousands of dollars in their 401k after that happened.
 
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