Tags: retirement | mistake | 401k | pension

Forbes.com: Avoid This Single Worst Retirement Move

Forbes.com: Avoid This Single Worst Retirement Move

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By    |   Friday, 09 September 2016 07:25 AM


The advice may seem simple and obvious. Yet, millions of Americans just can resist making this single, fatal retirement mistake: taking money out of your retirement plan before you retire.

“Although many people think they can’t avoid doing this, they may withdraw money for medical bills, living expenses and even college. It’s a bad idea,” Forbes.com reported.

The reason is shockingly simple: “When you take money out before age 59 1/2, you’re nailed for a 10% early-withdrawal penalty in most cases. Then you have to pay federal income taxes on the withdrawal,” Forbes.com reported.

“Depending on your tax bracket, Uncle Sam is taking at least 25 cents on the dollar if you cash out. But there’s more. When you take money out, the principal on your account goes down. That means that money can’t grow over time and you’ll have less money at retirement. If you don’t replace it, you’ll come up short.”

Meanwhile, a recent new survey of retirement confidence confirms that many workers lack realistic plans for making ends meet in retirement. It also suggests there is a disconnect between Americans' confidence about retirement and their actual preparations to ensure a comfortable one.

The Retirement Confidence Survey published by the Employee Benefit Research Institute (EBRI) is the longest-running annual survey of retirement confidence among both workers and today’s retirees — this is the 26th annual edition. It provides a long view of how we are doing as a country in preparing for retirement, and this year’s survey does contain some encouraging news.

EBRI found that the percentage of workers who are confident about having enough money for a comfortable retirement has continued to recover from the record lows following the Great Recession, Reuters reported. Twenty-one percent are very confident this year, compared with 13 percent in 2013. Those who are somewhat confident rose to 42 percent, up from 38 percent in 2013.

So that means 63 percent of those surveyed have some degree of confidence. But here is the problem — many people are just guessing. Only 48 percent of workers say that they or their spouse have ever tried to calculate how much they will to have save to live comfortably in retirement.  
 
(Newsmax wire services contributed to this report).

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The advice may seem simple and obvious. Yet, millions of Americans just can resist making this single, fatal retirement mistake: taking money out of your retirement plan before you retire.
retirement, mistake, 401k, pension
371
2016-25-09
Friday, 09 September 2016 07:25 AM
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