Some of us have corporate jobs that do 401k matching, I’m pretty sure even if I withdrew it all immediately and took the penalty, I would still come out ahead because of the matched contributions.
Either way, I definitely view it as an emergency last resort fund more than retirement savings
I have definitely wondered abot the tradeoff between pulling it out as a downpayment for a house and taking the loss but not renting vs leaving it for compound growth. It doesn’t matter at the moment since it is not enough to be practical but the conventional advice is that you always lose by doing this and I’m not sure I believe that is still true, though I haven’t actually tried to work it out.
You’d probably need over $200k in your retirement account (depending on your housing costs and apy) for it to be more cost effective to leave it in there and even then you’re still pissing thousands of dollars away a year in rent instead of owning property. It’s almost certainly better to buy rather than rent in this housing market.
There’s the combination of not paying rent and then the two questions of “will housing as a speculative asset outpace my 401k” and “can you retire without owning a house and if not is it better to secure the house and figure out the daily expenses later”. I do consider these mostly theoretical questions
Some of us have corporate jobs that do 401k matching, I’m pretty sure even if I withdrew it all immediately and took the penalty, I would still come out ahead because of the matched contributions.
Either way, I definitely view it as an emergency last resort fund more than retirement savings
I have definitely wondered abot the tradeoff between pulling it out as a downpayment for a house and taking the loss but not renting vs leaving it for compound growth. It doesn’t matter at the moment since it is not enough to be practical but the conventional advice is that you always lose by doing this and I’m not sure I believe that is still true, though I haven’t actually tried to work it out.
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You’d probably need over $200k in your retirement account (depending on your housing costs and apy) for it to be more cost effective to leave it in there and even then you’re still pissing thousands of dollars away a year in rent instead of owning property. It’s almost certainly better to buy rather than rent in this housing market.
There’s the combination of not paying rent and then the two questions of “will housing as a speculative asset outpace my 401k” and “can you retire without owning a house and if not is it better to secure the house and figure out the daily expenses later”. I do consider these mostly theoretical questions
There are some exceptions that allow penalty free withdrawals but the dollar limits are quite low.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
“qualified first-time homebuyers, up to $10,000”
lol,