The Expert Podcast

• 401K Fund Withdrawals in a Slowing Economy:
  • Over time, 401K balances have become a significant portion of some people's assets and net worth.
  • As the economy slows, there is a growing trend of withdrawing assets from 401Ks, especially when other forms of wealth are less liquid.
  • Unlike home equity, which requires a loan to access, 401K withdrawals have become more common.
• Hardship Withdrawals:
  • A hardship withdrawal from a 401K has some benefits, such as fewer tax consequences compared to regular withdrawals.
  • However, it still carries tax consequences, so it’s important to consult with tax professionals or attorneys before making a move.
• Potential Drawbacks of Cashing Out or Borrowing from Your 401K:
  • Typical withdrawals or cashing out can result in significant tax penalties.
  • Loans taken against a 401K can be an option, but they come with interest payments and reduce future retirement savings.
  • Reducing 401K funds impacts future financial security and growth opportunities for retirement.
• Inflation and Economic Impact on Finances:
  • Due to inflation and economic pressures, more people are withdrawing from their 401Ks.
  • Vanguard, one of the largest investment companies, has raised concerns about the increasing amount being withdrawn from 401Ks.
• Engagement Request:
  • Let us know in the comments: Are you considering withdrawing from your 401K, or are you still contributing as usual?