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

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.

I agree. OP doesn't realize most 401k plans allow you to borrow money against your 401k account. Best parts are:
- You are your own lender
- Payments including interest go directly back into your 401k.
- No IRS tax or early withdraw penalties, provided you fully payback you 401k loan.

I did this for down payment on a house, which enabled me to obtain a lower interest mortgage financing. Best investment I ever made, paid $315k for home in 2001 and sold it for $645k in 2005.

That enabled me to payoff my 401k loan, avoided IRS capital gains tax by reinvested it into my new house when relocating across the country for another job opportunity. In addition, I was able to rollover my 401k to my new employer's plan.

Those types of financial decisions are how I was able to retire 15 years earlier at age of 52 yo.

What's your thoughts on shifting some of my 401k into guarenteed lifetime income?

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.

What's your thoughts on shifting some of my 401k into guarenteed lifetime income?

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.

This is the correct answer. Never touch your retirement.

I'm pretty sure we looked into that when we cashed out and the time frame to pay it back or the amount or something was restrictive for us. I don't know about the OP, but if you are in a position where debt is eating you alive to the point you have to cash out, trading it for another payment instead of just being free and clear and starting over just isn't feasible.

What's your thoughts on shifting some of my 401k into guarenteed lifetime income?

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.

Greetings, GLP! Let me give you a little story because I think my situation is somewhat universal here on GLP and might be of use to some of you. My wife and I are lower/middle-class earners- she makes 16/hr as a CNA and I make 19/hr as a licensed level "D" wastewater treatment operator. Money has always been a struggle for us and we consistently have found ourselves in debt. Additionally, as of September 2022, I lost my job. I quickly found another for the same pay, but here is what I did. I cashed out my 401k (I had 63k after 11 years w/3% match=~42k after taxes and penalty)- set aside the money for taxes and here is how I spent it:

1.) Paid off our cars- 16k combined
2.) Paid off credit cards- 8k
3.) Paid off my wife's medical bills- 3.5k
4.) New furnace for our house- 5.5k
5.) Bought a few other needed things i.e. timing belt for car, new stove, new dryer etc...4.5k
6.) Put the rest in a wells fargo savings account-~4-5k

Never have we been more at peace. Prior to this we always struggled with money. We knew we needed some of these things but weren't sure as to how we could afford them. Plus the credit card bills were racking up. Now, some of you might wonder what we will do in retirement. Number one- we are hoping for SS, but even if it's not there, we only need ~1700 a month (combined) to live comfortably. We could essentially work part-time now and live just fine. Also by the time we retire 2047, our house will be paid off reducing our needed income to ~1200 a month- accounting for inflation as well!! So, long story short- some of you are in the same situation as us. I can tell you I dont care that many think we were stupid for doing this. That doesnt cause us to lose sleep- being in debt did, and now we have little to no financial worries. 100% worth it. And I could care less about the stupid stock market now. Something for you all to think about...

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

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!

Oh look. One idiot with his money condoning the actions of another. LOVE this website!!!

op is a complete financial dumbass and will forever regret that decision

good luck ever retiring, you'll be working till the day you die

You got burned and now your giving super poor advice to strangers. Enjoy the red homo.

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.

^^ this idiot lost all his money in 2009 cause like a scared pussy pulled out all his funds at a substantial loss at the worst possible time losing the most, and thinks everyone is a cowardly and stupid as he is. Don't be like this loser.

you know SOOOO much....

keep believing your own horseshit there buddy. (literally nothing you said is true)

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.

Many people I know never recovered from that. They were 64 in 2007 getting ready to retire and then couldnt. They couldnt live off SS so they had to keep working. 3 I know of passed away before the market recovered...

and you are assuming guaranteed gains of a 401k that covers that inflation, his interest rates on his debt for the next 20 years that he would've never paid off, and that he was able to put enough money weekly in his 401k that he would be able to cover all that plus decades of retirement

different people, different scenarios. you gotta figure out whats best for you. one solution isn't the fix for every problem.

Holy fucking shit!!!!! Someone in this thread with more than 2 brain cells to rub together.

How do you buy a house through a company?

You stupid fuck. Have you not heard of trrasurey bills or stable funds?! Just shut the fuck up already!!

That's great!

I fucking hate debt, and it stresses me out having it hang over my head.

I'm retired with a paid off house, and living on savings.

I don't have Social Security because I didn't get enough quarters in.

It's actually better for me not to have SS, because probably all I would get is the minimum, with Medicare taken out, taking it down to about $600 a month, and only covering 80% of my medical bills, which are high!

Right now my medical bills are 100% paid for, because of no income, just 0.01% from the interest from my savings accounts and CDs, which is basically nothing.

My last surgery was around $40,000, which means I would have to have paid $8,000 out of my own pocket! Basic SS would only give me about $7,200 a year, so I'm $800 ahead by not having Social Security!


I know what the Medicare bills are like because of taking care of my mother. One night in the hospital cost her a small fortune because of what Medicare doesn't cover.