Personal finance expert Suze Orman says making it easier for people to take from their future selves won't help them in the long run. #suzeorman #personalfinance #retirement #retirementplanning #401k More from MoneyWise: Follow us: Instagram: Twitter: Facebook: 00:00 Introduction 00:17 Don't withdraw from your 401K! 01:29 Conclusion...(read more)
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Suze Orman is a financial expert and TV personality known for her no-nonsense approach to managing money. One of her key pieces of advice is to avoid withdrawing money from your 401K to pay bills. According to Orman, this is a mistake that can have long-term consequences for your retirement savings. For those who are unfamiliar, a 401K is a retirement savings plan offered by many employers. You can contribute pre-tax dollars to the plan, which are then invested in a selection of mutual funds or other investment options. The goal is to accumulate a sizable nest egg over time that you can use to support yourself in retirement. However, some people may be tempted to withdraw money from their 401K early to cover immediate expenses, such as credit card bills or medical bills. This can be a tempting option, especially if you're facing a financial emergency and don't have other sources of cash available. Orman, however, strongly advises against this strategy. She points out that when you withdraw money from your 401K before you turn 59 and a half years old, you'll be hit with a 10% penalty on top of the regular income tax you'll owe. This can add up to a substantial amount of money, effectively reducing the amount of money you have saved for retirement. In addition, withdrawing money early can also limit the growth potential of your retirement savings. Over time, the compounding effect of investment returns can really add up. But if you keep taking money out of your 401K, you're reducing the amount of money that's available to grow and compound over time. So what's the alternative? Orman recommends that you work to build an emergency fund that can cover unexpected expenses without dipping into your retirement savings. She suggests saving up at least six months' worth of living expenses in an easily accessible savings account or money market fund. This will give you a buffer against financial emergencies without jeopardizing your long-term financial security. Overall, withdrawing money from your 401K to pay bills is a mistake that can have serious consequences for your retirement savings. Instead, focus on building up a separate emergency fund to cover unexpected expenses, and work with a financial advisor to develop a plan for saving and investing for the future. https://inflationprotection.org/mistakenly-using-your-401k-funds-to-pay-bills-according-to-suze-orman/?feed_id=107241&_unique_id=64888c480fe19 #Inflation #Retirement #GoldIRA #Wealth #Investing #401kmillionaire #401kwithdrawaltobuyfirsthome #401kwithdrawaltopayoffdebt #Finance #financialeducation #financialliteracy #financialmanagement #investing101 #investing2023 #investingforbeginners #investmentforbeginners #money #moneytips #moneywise #personalfinance101 #personalfinanceforbeginners #personalfinancemanagement #personalfinancetips #Retirement #retirementplanning #savingmoney #SuzeOrman #suzeormanretirement #suzeormansavingmoney #401k #401kmillionaire #401kwithdrawaltobuyfirsthome #401kwithdrawaltopayoffdebt #Finance #financialeducation #financialliteracy #financialmanagement #investing101 #investing2023 #investingforbeginners #investmentforbeginners #money #moneytips #moneywise #personalfinance101 #personalfinanceforbeginners #personalfinancemanagement #personalfinancetips #Retirement #retirementplanning #savingmoney #SuzeOrman #suzeormanretirement #suzeormansavingmoney
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