Seeking some 401k withdrawal options/ideas

4438 Views 37 Replies 16 Participants Last post by RedWoods, May 13, 2010

TANSTAF1

Discussion Starter · May 10, 2010

Like many 401k's mine does not have a lot of good options. I have most of mine in the safest available funds, but even the stable value fund has more than I like in Fannie and Freddie, although those are wrapped by large insurance companies and, who knows even the government might have few pennies to bail them out again when they need it real soon now.

Anyway, the imminent stock market crash had me looking at options again. I had not really considered withdrawing my 401k fund before, but I am over 59 and 1/2 so there is no tax penalty to withdraw my money.

Plus there is a risk that Obama may try to mess with 401k's so it may be a good idea to get out of it while I can.

The problem is that my wife and I are still working (that's the good news, I guess) and probably can continue to do so for five or so years unless the economy tanks a lot further than it has so far. But that affects the 401k withdrawal amounts as we are in a high tax bracket which when the Bush tax cuts go away and Obama further breaks his promise not to raise taxes on people making less than $250k, ours will go even higher.

The problem is what to do with any withdrawn funds. I believe in buying low and selling high. Gold and other precious metals are high (and yes they could go higher, but who knows).

What about TIPS, although I am leery about government stuff?

My wife wants to buy rental property which makes sense from the buy low policy, but I think there are other negative risks as to whether that would be safer. (We have a fully paid off summer place in a rural location, so we don't need a BOL.)

Any thoughts, options or ideas?

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Randall Flagg

· #2 · May 10, 2010

Take the money out now, do not invest in tips as inflation reported by the government is false anyway(what good is a tip earning 6% when inflation is really 8%).

if all preps are taken care of i would consider setting myself up as a after shtf business, maybe ammo, or maybe you could invest in some medical training.

people seem to overlook skills when thinking of investments.

anyway just a thought.

TANSTAF1

Discussion Starter · #3 · May 10, 2010

Ammo, that would be a good idea but I think the cost is high now, because the supply is low and the demand is up so it is against my buy low, sell high philosophy.

Some people suggest seeds or food, but those do not last. I was thinking of some durable goods, particularly those that might be in short supply here in a recession/depression, let alone a SHTF.

As for TIPs, if all I were to loose in the coming crash was the difference between a 6% inflation rate and an 8% one, I would consider myself a lucky man. Of curse it would be great to make money in the crash but with the risk of making money comes the risk of losing more. My primary goal is to preserve principal.

Enscheff

· #4 · May 10, 2010

Probably the safest place to put money is in a FDIC insured bank account. Just make sure to open additional accounts if you have more than $250,000. You will not be making anything to speak of in interest, but your money will be safe unless the entire US fails...at which point your money will be useless no matter what.

I am afraid the advice given on this site about buying silver, seeds and ammo is an extreme overreaction. The US is not going belly up in this lifetime.

If you do something silly like convert your money into gold, you will lose money when you convert to gold, and you will lose money every time you convert from gold back into liquid cash.

If you do something even sillier like buy seeds and ammo, you will be sitting on a pile of goods you will need to sell when it comes time to pay an inevitable medical bill.

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Rabble

· #5 · May 10, 2010

I would still put it in precious metals. I believe Obama's only option to wrangle the mountain of debt, is to monetize it through inflation. You don't make money with metals, you shield it from massive looses.

Randall Flagg

· #6 · May 10, 2010

My primary goal is to preserve principal.

then why even bother looking at dollars or dollar donaminated assets?

Probably the safest place to put money is in a FDIC insured bank account.

FACEPALM TIMES 1 TRILLION

You will not be making anything to speak of in interest, but your money will be safe

This statement is true, my friend in cali had his bank close with over 6700 in it, the fdic insured his money and told him it might ONLY take BY LAW up to 10 years to get back to him.

so you see, as long as the fdic owes him, he is never broke right?

I am afraid the advice given on this site about buying silver, seeds and ammo is an extreme overreaction. The US is not going belly up in this lifetime.

funny the romans said the same thing right before.......

If you do something even sillier like buy seeds and ammo, you will be sitting on a pile of goods you will need to sell when it comes time to pay an inevitable medical bill.

right, so what he is saying is buy stocks, which you will have to sell, maybe for a loss even. or buy a 500 box of 22 ammo for 15 bucks today and in 20 years when you need the money, the box of ammo now sells for 50 bucks.

with hard assets and inflation, you never really lose anything. hard assets are the only REAL inflation protection i know of.

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Randall Flagg

· #7 · May 10, 2010

Rabble said:
I would still put it in precious metals. I believe Obama's only option to wrangle the mountain of debt, is to monetize it through inflation. You don't make money with metals, you shield it from massive looses.

exactly

in 1920, an ounce worth of gold bought you a top of the line suit, in 2010 an ounce worth of gold still buys you a top of the line suit.

now if you would of kept that 20 in a bank account(in 1920) instead of a gold coin, you would be lucky to get a nice tie for that suit you cant afford(in 2010).

TANSTAF1

Discussion Starter · #8 · May 10, 2010

I no longer consider an FDIC insured bank to be safe for the type of crash that I think is coming. Ideally I would like something that is not under the government's control. Obama will take care of his fat cat friends, and the masses that will vote for him and put the sc3ws to the rest of us.

I agree the other things are not good options: precious metals can be stolen or confiscated, ammo is too expensive now, seeds don't last that long, and with all these there is the hassle of converting them back to the post crash currency of the day.

hawkbern

· #9 · May 10, 2010

Enscheff said:
Probably the safest place to put money is in a FDIC insured bank account. Just make sure to open additional accounts if you have more than $250,000. You will not be making anything to speak of in interest, but your money will be safe unless the entire US fails...at which point your money will be useless no matter what.

I am afraid the advice given on this site about buying silver, seeds and ammo is an extreme overreaction. The US is not going belly up in this lifetime.

If you do something silly like convert your money into gold, you will lose money when you convert to gold, and you will lose money every time you convert from gold back into liquid cash.

If you do something even sillier like buy seeds and ammo, you will be sitting on a pile of goods you will need to sell when it comes time to pay an inevitable medical bill.

Well, a bunch of folks here are pretty 'silly'.

What evidence do you have that the US will not go belly-up in this lifetime. If you have some inside info, I wouldn't mind hearing it.

Randall Flagg

· #10 · May 10, 2010

TANSTAF1 said:
I no longer consider an FDIC insured bank to be safe for the type of crash that I think is coming. Ideally I would like something that is not under the government's control. Obama will take care of his fat cat friends, and the masses that will vote for him and put the sc3ws to the rest of us.

I agree the other things are not good options: precious metals can be stolen or confiscated, ammo is too expensive now, seeds don't last that long, and with all these there is the hassle of converting them back to the post crash currency of the day.

So in other words, there is nothing you can invest in that would satisfiy you.

end thread/

woodyp

· #11 · May 10, 2010

hawkbern said:
Well, a bunch of folks here are pretty 'silly'.

What evidence do you have that the US will not go belly-up in this lifetime. If you have some inside info, I wouldn't mind hearing it.

Only reason I might say that is if the doc had just given me six months to live.

kahn

· #12 · May 10, 2010

Buy the Kuwaiti Dinar, their economy will rise with ours due to oil consumption.

TANSTAF1

Discussion Starter · #13 · May 10, 2010

I know you're not serious, but anyway if our economy tanks again big time, oil consumption will be down as will the Kuwati dinar

kahn

· #14 · May 10, 2010

Well it's a bet that we'll continue to consume oil, China and India will continue to consume as well, and when our economy tanks again on the W shaped recovery graph, their currency won't fall as far as ours.

Then again the Swiss Franc is always a pretty safe bet to hold value.

Enscheff

· #15 · May 10, 2010

hawkbern said:
Well, a bunch of folks here are pretty 'silly'.

What evidence do you have that the US will not go belly-up in this lifetime. If you have some inside info, I wouldn't mind hearing it.

There is nothing I, nor anyone else, could ever say to convince the doom and gloomers that the US isn't going belly up anytime soon. Just like there is nothing an athiest could say to a Bible thumper to convince him God doesn't exist.

The Roman Empire did not just go POOF overnight, leaving all its citizens destitute. The Empire slowly decayed, folks migrated to find better opportunities, and other empires grew in power as a result.

There was no point in time when the ancient members of survivalistboards.com all became enlighted and dumped all their Roman currency into gold, seeds, and bronze arrowheads.

So go ahead and buy gold bullion in fear of the fall of the US. Pay the fees to convert your money to gold, and back again, and earn nothing to keep up with inflation.

Then in 50 years when the doom and gloomers are STILL predicting the fall of the US because we are about to join some global federation, you can stack your gold coins and count your .223 rounds to your heart's content.

Fact of the matter is that nations rise and fall, but the rich stay rich regardless. I can assure you the wealthy are not buying gold, ammo and seeds. So do what they do and invest in the corporations that are going to be running the world anyways. At least then you will be getting a piece.

How many .223 rounds do you think Warren Buffet owns?

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JtCamp05

· #16 · May 10, 2010

Cash out and use the funds to make improvments in items that have a tax credits..... Offsetting your high taxes.... They have credits on everything from Solar to appliances..... by making yourself self sufficant you will not need the cash for living expenses......

Do you need more land?...Prices are low at the moment

You could use any fund's to build and supply a comfortable self sufficant lifestyle and stop giving your hard earned money to wall street......

And well at least you would have some items with value..... that value of what you have now of only what someone will give you for it.....

neosurvivalist

· #17 · May 10, 2010

Back to your 401K question. After September 2008 I read a lot, I petitioned my company to remove my money from the Fidelity 401K and roll it over to an IRA with Vanguard. (Vanguard takes a lot less in fees) (I can't take it out of the retirement system completely without getting killed in taxes.) They approved it. I then spread it around with Vanguard; one third money market/inflation adjusted short term and int. term Treasuries, one third gold mining, materials, energy, agriculture funds and one third international, pacific and all but US dividend producing medium risk funds and US value funds. In addition, I have now built up six months of expenses in cash (four months in the bank, two months "somewhere else" but easy to get to. Lastly, I built up $12,000 in American Eagle and European gold coins spread evenly between ounces, half, quarter and 1/10 ounces, Swiss francs. To me, that's short term peace of mind money. I hope that will cover me. It's meant no vacations or "fun money" for while, but Fall 2008 made me too nervous to not prepare. Still working on my food preps but making good progress.

You might want to consider moving some of your 401K over to a Roth IRA and pay the taxes now rather than in two years when Obama has them raised to 70% to cover increased entitlements.

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13FoxTrot10

· #18 · May 10, 2010

The Roman Empire did not just go POOF overnight, leaving all its citizens destitute.

Neither did the US, we've been working hard on it since 1913.

folks migrated to find better opportunities, and other empires grew in power as a result.

So THAT's what did it! It wasn't spending, debt, taxation, armies all over the "empire", devaluation of their currency, loss in faith of the currency, black market/loss of tax revenue, etc., etc.. ?

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TANSTAF1

Discussion Starter · #19 · May 11, 2010

neosurvivalist,

Thanks for bringing this more directly back on topic. You had some great points.

I admit the tax thing is an issue, but I think you are right it may be better to do it now before Obama makes it worse. At least I am not in the penalty category.

I have/had been thinking out of control inflation was imminent. This would mean cash assets in money (in banks or under the mattress) would be risky as they could rapidly loose their value.

I think why it has not happened is because the banks are just holding onto all the money the government has printed so the money supply has not increased as dramatically as one would have expected. For what it's worth Moody's says the debt shock won't be felt until 2013.

I guess some are saying there is a risk of deflation.

I think everything now is a house of cards and all it takes is a foolish trading error or the like and it will be like a row of dominoes.

I think a 30's style depression is very possible, so while I can prep to survive by learning to grow my own food, it would be nice to have some cash or cash equivalents still left when everything collapses

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hawkbern

· #20 · May 11, 2010

Enscheff said:
There is nothing I, nor anyone else, could ever say to convince the doom and gloomers that the US isn't going belly up anytime soon. Just like there is nothing an athiest could say to a Bible thumper to convince him God doesn't exist.

The Roman Empire did not just go POOF overnight, leaving all its citizens destitute. The Empire slowly decayed, folks migrated to find better opportunities, and other empires grew in power as a result.

There was no point in time when the ancient members of survivalistboards.com all became enlighted and dumped all their Roman currency into gold, seeds, and bronze arrowheads.

So go ahead and buy gold bullion in fear of the fall of the US. Pay the fees to convert your money to gold, and back again, and earn nothing to keep up with inflation.

Then in 50 years when the doom and gloomers are STILL predicting the fall of the US because we are about to join some global federation, you can stack your gold coins and count your .223 rounds to your heart's content.

Fact of the matter is that nations rise and fall, but the rich stay rich regardless. I can assure you the wealthy are not buying gold, ammo and seeds. So do what they do and invest in the corporations that are going to be running the world anyways. At least then you will be getting a piece.

How many .223 rounds do you think Warren Buffet owns?

And why were you on this website again?

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