Hardship withdrawl from 401k to buy my primary homestead?

Ummmmm . . . . . . . . . . gasp . . . . . . . . . . . . . . . WOW!!!!!

For those of you not saving for retirement, who exactly do you think is going to take care of you when you are unable to work anymore?

And while some can work up to the point where they pass away, many cannot. The majority of people would like a small respite from work after a lifetime of work! I also don't know what kind of job you would plan on working in when you are 85 years old.

I hope many learn a self sufficient lifestyle, as some here sounds like they will be homeless when they are old.

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Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

I kinda see NOT saving for retirement as gambling. You're gambling on the chance of your health and mental capacity continuing at the current rate for an undetermined amount of years. Pretty foolhardy to me. Why not sock something away just in case? Worst case scenario you're 87 with a butt load of never-needed cash in hand..... senior's cruise, anyone?

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" It's better to ride even if you get thrown, than to wind up just wishin' ya had."

Chris Ledoux

Not based on Christianity but I don't believe in long term 401K plans either. Go ahead and use them if your employer is contributing to it. Such as for every $1 you put in they'll match it. Then when you get a sizable amount withdraw it and invest it in real estate such as your land and home. Land rarely goes down in price. City lots with a house on it might devalue, but a country home will pretty much just keep increasing in value.

But as for long term investments in 401k's, if your a young person just getting out in the work force. Every dollar you invest over a period of some 30 to 40 years will only be worth about 30 percent of what you could do with it now.

So I think it's better to use it now then let it go to waste in the future inflations that's to come in the next 30 or 40 years. Why most people need a good amount of money to live in their retirement years is cause they didn't learn how to live on bare necessities throughout their life. They were big spenders and that's what they want in retirement.

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r.h. in oklahoma

Raised a country boy, and will die a country boy.

Well we do have a decent retirement plan. It won't allow us to wallow in luxury, but it will allow us to live comfortably, unless of course we are taxed out the wazoo to support many more failed "investors".

I can't say that when I am old as dirt I want to be forced to live on the bare necessities. I could if I really had to, but I would prefer to have a few of the little things that make life a bit more pleasurable.

My home and land are paid for. We raise all our own meat and (usually) most of our own veggies. So we can live pretty well on a fairly small income. It is the unplanned for things that are likely to bite us...

Mary

My retirement plan will add to that of my social security income (IF there is any by then!) so that I can pay my utilities, property taxes, home upkeep and medications etc. I don't WANT to have to worry about finding or keeping a job at 85 years old!!! Walmart can only use so many greeters!!!! LOL I wouldn't dream of NOT preparing in some way for my old age. To me it's kind of like the story of the ant and the grasshopper....the grasshopper will be knocking at welfare's door and there just may not BE any welfare monies left by that time. It's foolish NOT to prepare for you old age!!!!

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Eternal Optimist

My brother never invested in a 401k or IRA, He decided to retire at age 62, guess what he is doing now at age 67 -- working trying to make ends meet cause SS ain't cutting it.

He never did have any kind of financial sense.

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Apocalyptic and Survival Fiction - Readers and writers welcome

Interesting, your joining those two together. Not sure how you got one from the other, if that's what you're implying.

How about:

Matthew 6:19 “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. 20 “But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; 21 for where your treasure is, there your heart will be also.

or

James 4:13 Come now, you who say, “Today or tomorrow we will[g] go to such and such a city, spend a year there, buy and sell, and make a profit”; 14 whereas you do not know what will happen tomorrow. For what is your life? It is even a vapor that appears for a little time and then vanishes away. 15 Instead you ought to say, “If the Lord wills, we shall live and do this or that.” 16 But now you boast in your arrogance. All such boasting is evil.

As far as I know, the bible never says to take care of yourself, but to love one another and take care of each other.

Not saying I agree with not having a 401k or insurance, etc...We have both but I do see the other side of the argument. Having insurance is like not trusting in the Lord to take care and provide.

Rachel

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Rachel K
(and sometimes Matt)

Parents to Danial, Jacob, Isaac, Clara, Sarah Jo, and twins Emma and Anna born 12/18/2009!

http://www.jerseyknoll.com

Rachel, I get what you're saying.

However, not having insurance because the Lord will provide is kind of like that often told joke about the guy on the roof of his flooded house who refuses the boat and helicopter.

Kayleigh

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http://kayleighjeanne.blogspot.com

Um, looking at the Mennonites, which have neither car insurance(yes they drive cars) or health insurance, they take care of their own, like the Mormons.

It can be done.

Sorry to burst the bubble faithful one, but mennonites (at least in PA) usually have both.
They HAVE to have car insurance if they drive (required) and most have health insurance.
Heck, even the AMISH around here have a co-op style health insurance that they pay into every month.
But yes, they do take care of their own in times of crisis and disaster. There are virtually no destitute types in these faiths.
Some Mennonites DO invest, but Amish don't invest in stock markets, only real estate (which they do VERY well at).

As to the 401K,
I checked into the "hardship" rules once for my husband. He was VERY sick and we needed money to pay off hospital bills. Basically I was told I had to prove he was dying to get the money (he wasn't).

But this is an interesting question you have asked and I have a similar one. My husband is leaving his job soon and we are wondering what to do with our 401K in this terrible market. It would be a much bigger help for us to have the cash but aren't the penalties astronomical?
We have only 10,000 in ours at this time.

Cashing out is fully taxable, plus a 10% penalty. So, if you're in the 15% tax bracket for Federal taxes and have State taxes about 5%, you're looking at losing 30% right off the top. Plus, if you sell now, when the market has tanked, you're selling at the worst possible time.

Most company 401k plans allow you to leave your money there as long as it's above some threshold amount. If you're content with the investment choices your husband's 401k has, you could leave it. If not, you can roll it over (no taxes or penalties) into a self-directed IRA. Regardless, I'd avoid cashing it out if at all possible.

Lorian:

Here in Northeast Indiana some of the Amish invest in the stock market. I have had several conversations over the past months about invetment strategies with two of my Amish neighbors.

Jim

Lorian, this isn't a terrible market if you are buying. It's only a terrible market if you are selling. Don't get caught up in the media hoo-ha.

Find out what your specific options are with your fund. You may be able to leave it where it is for a while, or roll it out (no penalty) to a fund with a company outside your husband's firm.

But, you must ASK the questions of his current fund manager.

This is a great time to be buying!

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Alice
* * *
"No great thing is created suddenly." ~Epictitus

I'm not sure that investing money in today's market is "wasting" money when in the future it won't be worth what it is today. You are correct to a point - a loaf of bread today might cost you $1.50, and when you go to retire it might cost you $5.25. But you can't buy up a lifetime of bread and store it to use once you retire! With the stockmarket, historically the market has gone up. And as you invest money (and gain interest or dividends on it), that keeps snowballing so in the future, you have a large stash. (Well hopefully - if you invested correctly.)

However, think of all the retired people now. When they retired 10 years ago, their property taxes might have only been $1000.00. After they have been retired for 20 years, their property taxes might now be $3500.00. In case you don't know, it might be a little bit hard to go out and get a job at age 80! And even people with pensions, usually their pension stays the same. While it might be more than enough to care for them when they first retire, after being retired for 20 years, that same pension sure doesn't buy what it used to.

Perhaps you think us ants are wasting our money throwing it in the market. We very well could be if the market tanks! However, I'd rather at least try to have a little extra money in retirement, rather than not even try at all and hope that SOMEBODY will take care of me in the future.

But to each his own I guess.

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Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

The best "investment" for your future is to be completely debt-free!
but I would not cash out a 401K unless it was an absolute last resort (maybe
to avoid a foreclosure). A had a 401K-like investment account (State of MO).
I quit my job with the state to be a stay at home mom. The account sat there for
a while without anything being added to it, then I rolled it into a Traditional IRA
invested in good mutual funds. Not all IRAs are created equal!

The other really important factor when making market decisions is your age. If you are 61, don't put money in the market right now.

I'm 53. I'm buying because I figure by the time I need the funds, the market will have recovered.

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Alice
* * *
"No great thing is created suddenly." ~Epictitus

I'm Mormon and we do have: car insurance, health insurance, IRA's, 401k's etc
Do we help take care of each other? sure thats a basic commandment, but we're ultimatly responsible for ourselves.

Straight from the Bible:
1 Tim. 5: 8
8 But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel.

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Apocalyptic and Survival Fiction - Readers and writers welcome

I agree with you completely.

I also think that insurance is the primary reason for the inflated cost of health care. If doctor's didn't charge based on the insurance companies paying the costs, they would be more competitive in their charges and maybe a bit more personable. Who shops around for doctors based on what they charge?? Nobody, because they all charge what the insurance max payout for certain services is.

Rachel

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Rachel K
(and sometimes Matt)

Parents to Danial, Jacob, Isaac, Clara, Sarah Jo, and twins Emma and Anna born 12/18/2009!

http://www.jerseyknoll.com

Most of the mennonites around here drive tractors and I don't think you have to have road insurance on them. The other day I saw a Mn. on a tractor pulling a small camper type trailer. I could see his wife and children peeking out the windows as they were traveling down the dirt road.

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r.h. in oklahoma

Raised a country boy, and will die a country boy.