Is It Okay To Tap Into My Retirement Funds?
The global health crisis has hit everyone in some way. For many, they experienced tremendous loss of income, some with none at all. While unemployment and added government assistance stimulus checks were helpful to some degree, there are many who are still greatly struggling and weighing all income options, including accessing retirement funds early as a matter of survival.
Tips From Our Friends at Choice Investments
Generally speaking, it is always better to leave your retirement accounts alone and pull funds from non-retirement accounts first. This has to do with many factors including the longevity a retirement account requires to make steady gains and compensate for market losses. Over time, these accounts steadily grow. If money is taken out, the compound rate of return structure changes and there are usually pretty stiff penalty fees and taxes for early withdrawal.
Alternatives To Consider
If you have an Individual Retirement Account (IRA) and are under the age of 59-1/2, rather than withdraw from your IRA, you may want to consider a personal loan, or home equity line of credit (HELOC). This allows you to borrow against yourself at a lower rate, rather than assume the 10% penalty, and have to pay taxes on the money withdrawn.
If you are over the age of 59-1/2, you could take a monthly withdrawal from your IRA to make the loan payments. This way you are only taking out a portion each month, which can be more cost effective than withdrawing a larger lump sum.
If you have a 401k you can always take a loan out against that plan too. Again, this is not ideal, but it is a better alternative than withdrawing a larger lump sum.
If you have no other choice, then by all means withdraw from your IRA. Money is needed for survival and nothing is more important than your life and health. Just be aware of what you may lose in income overall during the long term.
Whether you’re a new or experienced investor, we’re here to help with our investing options. We are more than happy to discuss your personal situation as everyone’s is unique, especially during this stressful time.
If you have any questions, call 315-735-8571 to discuss your options. If you are ready to get started click below.
1IRA's are offered through First Source FCU and are federally insured by NCUA.
2Stocks/Stock Funds, other securities, and advisory services are offered through Cadaret, Grant & Co., Inc., a Registered Investment Advisor and Member FINRA/SIPC. These products may also be offered by a First Source "dual employee" who accepts deposits on behalf of the credit union and also sells non-deposit investment products on behalf of Choice Investments LLC through Cadaret, Grant & Co. Choice Investments LLC, Cadaret, Grant & Co., Inc. and First Source are separate entities. You can check the background of these financial professionals through FINRA’s BrokerCheck. First Source Federal Credit Union is not a registered broker dealer and is not affiliated with Choice Investments LLC.
NOT FEDERALLY INSURED • MAY LOSE VALUE • NO CREDIT UNION OBLIGATIONS • NO CREDIT UNION GUARANTEE
Funds invested through Choice Investments are not federally insured, may lose value, and are of no way obligations of First Source FCU. Involves investment risk and may involve loss of principal. First Source has no guarantees of securities and annuities products offered through Cadaret, Grant & Co., Inc. Licensed to offer securities in the states of AZ, CT, FL, IA, MA, MD, NC, NY, SC, & VT.