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7 times when it's OK to tap your retirement fund early

GOBankingRates Logo By John Csiszar of GOBankingRates | Slide 1 of 27: Taking an early withdrawal from your 401(k) is not only costly in the short term, but it can also jeopardize your long-term retirement goals. If you withdraw retirement accounts before the penalty-free 401(k) withdrawal age of 59 1/2, you’ll be forfeiting the benefits of tax-deferred earnings and compounding interest, which diminishes the savings power of 401(k) accounts. These plans are specifically designed for long-term investing, making the years work in the contributor’s favor. Because of the severe financial penalties, withdrawing money early from retirement accounts should only be done in an extreme emergency, ideally, after any emergency funds and investments have been depleted. If you are in a financial pinch and considering taking money out of your 401(k) or any other retirement savings account, here are seven times you might consider dipping into your retirement fund early. Last updated: April 2, 2020

Dipping In Early

Taking an early withdrawal from your 401(k) is not only costly in the short term, but it can also jeopardize your long-term retirement goals. If you withdraw retirement accounts before the penalty-free 401(k) withdrawal age of 59 1/2, you’ll be forfeiting the benefits of tax-deferred earnings and compounding interest, which diminishes the savings power of 401(k) accounts. These plans are specifically designed for long-term investing, making the years work in the contributor’s favor.

Because of the severe financial penalties, withdrawing money early from retirement accounts should only be done in an extreme emergency, ideally, after any emergency funds and investments have been depleted. If you are in a financial pinch and considering taking money out of your 401(k) or any other retirement savings account, here are seven times you might consider dipping into your retirement fund early.

Last updated: April 2, 2020

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