Author: MJT
Preparing for an Early Withdrawal of Retirement Funds
Should you withdrawal your retirement funds early? It may
seem like a great source of funds to meet your current financial obligations,
but the long term effect of an early retirement withdrawal might not be worth
doing so to meet short term financial obligations. Withdrawing from retirement funds early can
carry a penalty of 10% or so, and this may be a cut you’re not willing to take.
But there are circumstances in which you could make an early retirement
withdrawal from your savings and avoid these penalties.
To see if your situation qualifies you for exemption from
the penalties generally associated with an early retirement withdrawal, you
will need to review your own personal account. There are, however, some
situations that generally qualify you for exemption from any account. These
include situations in which you have become disabled, either permanently or
totally, and situations in which you were left unemployed without health
insurance. Other situations that may qualify you for exemption could be a need
to cover education expenses for you or a dependent, the purchase of a home,
etc.
Things to Consider
If you’re not considering making an early retirement
withdrawal for any of these reasons, you have to decide whether or not making
the early withdraw is worth the financial penalties associated with doing so.
If you’re in a situation that leaves you no other choice, unexpected hardships,
etc., than maybe a 10% loss is worth the security of knowing that you have
money available to address your current needs. But if you can avoid leaving
this money alone until your legal age of retirement, obviously you will yield
the greatest return.
No matter what you decide, you should consult with your
account advisor before making your early retirement withdrawal. You may be able
to come up with another option you didn’t know you had, or you might find that
by going about things in a slightly different manner you could qualify yourself
for exemption from the penalties of early withdraw. Be prepared to take a loss when you start
planning to make an early retirement withdrawal to account for your finances
most accurately. Keep in mind that you have worked long and hard for this
money, and consider what an early retirement withdrawal will do to your
financial state when you are actually ready to retire. You are sure to make the
right decision for your family.
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