If it isn\u2019t the cardinal rule of retirement planning, it\u2019s certainly high on the list: You never dip into your retirement savings early. That\u2019s critically important to anyone looking to ensure a financially steady, secure retirement; if you dip into your IRA or 401(k) before retirement, you could potentially jeopardize your entire savings plan.<\/p>\n
This wisdom about holding fast and not dipping into your retirement savings prematurely is oft-repeated, and not without reason. There are many pre-retirees who do tap into their accounts before they should, perhaps anxious to pay for a child\u2019s college tuition, to pay off the mortgage, or to fund a massive home improvement project. Everyone\u2019s situation is different, of course, but generally speaking these are going to be poor reasons to raid your retirement accounts early.<\/p>\n
But are there ever acceptable times to dip into your retirement account prematurely? You should always consult with your financial planner first\u2014but the short answer is that yes, there are occasional, isolated incidents in which people do get into their accounts early, and it proves the smart thing to do (or, in some cases, the only real option).<\/p>\n
For example, you can take penalty-free distributions from qualified retirement plans if you become either totally or permanently disabled.<\/p>\n
On a related note, if medical issues begin to stack up and your healthcare bills become burdensome\u2014as in, more than ten percent of your adjusted gross income\u2014you may find that dipping into the retirement account is your only solution. In some circumstances, distributions will be penalty-free.<\/p>\n
Finally, if you\u2019re getting a divorce, you may be required to split your retirement account in half and distribute part of it to your spouse; when ordered to do so by a court, you can at least rest assured that you won\u2019t be penalized for the distribution.<\/p>\n
There are a couple of other instances in which retirement accounts are commonly raided\u2014and while we do not recommend them, we do want to note them:<\/p>\n
Some entrepreneurs use their retirement savings to help fund a new business venture.
\nSome use their retirement money to buy their first home; to a certain extent, this money can be claimed without tax penalty.
\nWhile both of these scenarios are possible\u2014even common\u2014we would recommend against them. Withdrawing from a retirement account early is something to be done only when it is absolutely necessary\u2014and never without the consultation of a financial planner.<\/p>\n","protected":false},"excerpt":{"rendered":"
If it isn\u2019t the cardinal rule of retirement planning, it\u2019s certainly high on the list: You never dip into your retirement savings early. That\u2019s critically important to anyone looking to ensure a financially steady, secure retirement; if you dip into your IRA or 401(k) before retirement, you could potentially jeopardize your entire savings plan. This […]<\/p>\n","protected":false},"author":2,"featured_media":537,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","footnotes":"","compliance_id":"","post_disclaimer":""},"categories":[14],"tags":[15,80],"acf":[],"yoast_head":"\n