 |
Investment losses, job loss or downsizing, an upward adjustment on your adjustable rate mortgage, and higher prices on everything from gas for your car to rice for the table are only some of the current factors that could derail your financial planning for your golden years.
When your income is not covering all your expenses, it can be tempting to simply cut out the expense of saving for retirement -- or tap the savings in your 401(k) or IRA to pay the bills. But there will always be negative consequences to those actions. If you simply stop saving, you'll almost certainly reduce the amount of money available to you when you decide to retire, and you may even have to postpone your retirement.
Uncle Sam allows you to take out a loan from your 401(k) or to withdraw money for certain financial "hardships," including preventing foreclosure on your home. But the criteria are stiff, and you'll incur financial penalties (BusinessWeek.com, 9/23/05) that could take you years to overcome. And if you're younger than 59-and-a-half and simply withdraw money from your 401(k) or IRA, in almost every case you'll also incur a 10% penalty and have to pay income tax.
Control Your Spending
"Anytime a dollar can stay in the 401(k) or retirement plan, that's a dollar not yet taxed and a dollar that is there for tomorrow," says Jamie Milne, a financial planner in Barre, Vt. "The fundamentals of retirement |
|
