Cashed out my 401k and my wife and I have never been happier!!!

I think OP did the right thing. The 401k was losing 10% in purchasing power due to inflation. His debts were probably increasing 5-15% a year due to interest. If he hadn't paid the debt now, he would be spending a large chunk of the retirement fund to pay off an even larger debt later.

OP only thing I'd recommend is to try and pay off the mortgage faster.

You bet!

100% agree- thanks!!

Oof. You better hope you die young

You mentioned paying off 'wife's medical bills' which indicates that she must have some ongoing medical problems that require healthcare insurance. The problem with working part-time or 1099 is that there is oftentimes no health care associated with the job. Unless you are close to 65 and can go on Medicare, one of you will have to continue work fulltime to get benefits and, unfortunately, employers are not covering additional family members under their programs anymore; they'll cover you, but you have to pay for anybody additional.

My BIL is 'retired' (family sold a business) but still pays close to $30,000 a year for medical insurance for himself, wife and 2 kids.

Good luck! The benefit of the 401K is that it does lower your taxable income, deferring it until you retire. I'm not a big supporter of it as it should never have been set up as a 'retirement' program and was initially set up for high income individuals so that they could move income into the future so they didn't have to pay taxes on it. With rising interest rates, people are going to have difficult time making the '8%' a year they need in the stonk market.

Good!
Now might I borrow 900 bucks for head gasket repair on the car?
I'd be alright if I had some sort of health insurance but what little $$ I have is going to my medicine and my doctor every 3 months.

The OP is an idiot. What meager investment he had is now gone

Congratulations. I'm glad to see your optimism. You got out of the debt rut/trap/original sin.

Debt is pernicious. Speaking of which, I've begun to wonder how many students ran put to get loans, hoping for the "student loan debt forgiveness" carrot. Vile banksters...

i did the same

luckily i have no debt but do have a new car loan but its not a lot. thinking about paying it off with part of the 401k money but i'm just saving it instead for now.

good job getting out of that rigged system before they steal it all from you OP. the taxes and penalties suck, but it doesn't suck as much as gambling your money on a game you have no say or part in.

The two worst financial decisions you can make are touching your 401k, and having cc debt.

OP managed both.

He’ll be working until he dies.

Do not follow his advice!

Unless you want to be old and broke.

Unreal that people are this stupid, it’s sad.

A small short term gain and totally sabotaged the rest of his life.

He was probably losing wealth because debt interest greater than capital gains, not to mention market volatility.

most people aren't going to live until retirement age. and with the value of the dollar, along with the instability in the markets and the economy, especially seeing that the govt can shut down more than half the country on a whim due to a cold and crash everything, why in the hell anyone would invest in a system that only makes the rich richer is beyond me.

i guess you're one of those that liked losing half their money in 2008, and now its finally just about gained it back and when you lose half again, you'll say "oh don't worry it'll make it back in 10 years"....

hope you time your retirement perfectly so that you don't have to cash out on a huge drop!

People that are counting on living off SS and cash out their only retirement

absolutely horseshit schill for wall street.

most people who have 401k don't have enough to retire on anyway and never will as they don't make enough money to put in enough to actually ever have REAL gains.

these are the types of people the rich convince to play their game, only to take most of it while manipulating the market.

if a multimillionaire loses half their 20 million invested, they still have 10 million

if someone has $100,000 invested and it loses half, someone is gonna have to choke a bitch.

they wouldn't have enough money to cover it.

just like if everyone went to the bank to cash out savings/checking accounts today.

there would never be enough cash on hand to pay everyone out, then the real shit starts.

Smart move, cash out before everyone realises that the money is gone

this is what the market schills don't understand.

most people don't make enough to invest enough in a 401k to every have REAL retirement money. thats why when the market is bad/loses, it hurst people like us more than anyone.

stock markets/401ks are not for everyone.

They say to grab some precious metals with your fiat while you still can.

Many bad assumptions underlying your argument.

First and foremost that we’re all gonna die soon. Chill out.

You should have your age in fixed income, as a rule. So if you’re retiring at 65, you only have 35% in the stock market. Even a 50% loss there won’t affect you that much. Plus if you have two brain cells to rub together you can see market peaks and roll out when it goes down from an obvious top. I’ve done this twice and rolled back in near the bottom. Saw huge gains.

I’ve accumulated 2.4 million in my 401/IRAs, and I’m not yet 50. Granted I make a lot more than most but the principle is the same. Start saving young and don’t touch it.

and if he dies tomorrow, next week, next year, 5 years from now, what good did keeping a 401k do for him?

lets consider both scenarios.

If you’re stupid enough to have your entire 401 in the stock market, you deserve it. There’s this thing called fixed income funds, and t bills….

Some believe YOU are the one flexing "financial" stupidity in Ramsey's "reality." Living paycheck to paycheck and still falling short while continuing to pile up debt to make ends meet is NOT OK and thinking one can continue to live this way while stuffing income (technically, not even income but debt) into a 401K is quite laughable as a strategy. You probably "invested" in metals that are held in a vault somewhere.

OP now has NO DEBT which means he is not a debt slave. Sorry you don't see how trading in the 401K for freedom was a very smart choice. He and his wife still have jobs and some money left over. He can plan for retirement if he is smart about it.

YOU are free to choose the slave system over freedom but OP will be proven RIGHT! I hope your 401K is not stolen when the collapse happens and I truly DO mean that since so many hard working, good (but gullible) people still believe in the debt slave system that is getting ready to **** everyone over.

OP, stay out of debt and little by little, prepare wisely for your retirement as you can while staying out of the debt slave system.

if you have that kind of money to invest, great

like i said, MOST do not and cannot put 35% of their income in to savings as we have mortgages to pay, bills, food, etc.

if i had 2.4 million in the markets i'd be schilling for people not to pull their money out as well....

Last Edited by 1-2-Follow on 01/05/2023 11:41 AM

i signed up for my companys 401k but i dont think i can run that far.

most people are on their employers 401k system. thats what i'm assuming by this thread anyway

Get divorced, sell the house. Take cash advances on all the cards. Get citizenship in another country. Buy a house through a company.

Totally agree with you. I knew by posting this it was going to be split how people reacted. Ill just say- taking a brief glance at the stock market today- I would have about 8k less had I not have cashed out when I did. After penalty and taxes that amount covered my furnace...

63k is certainly not enough to retire on. Your expected retirement time of 2047 means you have more than two decades to earn this back and based on returns you did the right thing and certainly what I would do. Congratulations - now try to save if you haven't first for emergencies and try not to rack up debt. Considering you paid off vehicles and did repairs - you sound practical a great trait in those with better financial behaviors.

Actually my wife and I took out a 401k loan even though we had savings to cover for an addition to our home. The 401k loan interest we are paying ourselves back with is better than the returns we had on our 401k invested over its length. My wife is a financial controller and we crunched the numbers over and over - it was a no brainer to use our 401k balance to pay for the addition and keep our other savings where it was and just pay ourselves back with interest to the 401k loan.

Worst case we lose our jobs, the 401k loan turns into a payout/distribution then we would be taxed on and then use some of the prior 401k balance to settle or our savings.

A home equity loan or personal loan would have been much higher interest rates and that is with my wife and I having an 800ish score each and higher income than average- its crazy what rates are now!

Amen my friend

So you paid taxes and a 10% penalty to get out of debt that you should never have gotten into in the first place. Now you have no retirement savings and set the standard to never have it in the future.

Finally, you think you'll live on $1,200 a month 25 years from now. Assuming 5% annual inflation (currently running at least 8%) cost of living will be 3.4x current prices. You won't even be able to buy food for $1,200 a month.

You are a financial genius.