401K - please share your thoughts

[Sharon in SC]

Dh has contributed the max to his 401K for more than a decade now. This is an employer match situation. I spoke with a friend last week whose dh cashed all of theirs in. (I don't even want to think about the sum total of penalty fees and taxes to be paid on a move such as that). This conversation caused me to wonder what the hive mind's thoughts are on this. Leave it in and ride the wave? Cash it all out now, no matter the fees? Conventional wisdom, of course, dictates staying in and taking advantage of the buying low principle (converse to what my friend's family has done which is to sell low). What say you?

[Ria]

I think your friend's dh acted rashly. Hang onto the 401K and keep putting money in. The US economy is basically sound. It will bounce back...certainly long before we retire!

 

Ria

[NicksMama-Zack's Mama Too]

buy low....

 

sell high...

 

'nuff said.

 

K

[susie in tx]

We're riding the wave wrt the 401K. It's losing money and that sucks, but we're also in it for the long haul.

 

My dh is wanting to get into the stock market now. Hopefully, I'll be able to convince him that mutual funds are a better idea.

[Sharon in SC]

I think your friend's dh acted rashly. Hang onto the 401K and keep putting money in. The US economy is basically sound. It will bounce back...certainly long before we retire!

 

Ria

 

Hi, Ria! (Our dishwasher is running as we speak! ;-P). On the topic at hand, this is my sentiment as well. The real kicker for me, though, was when she said, "He felt God told him to do it." I guess it's possible God might have one directive for one child and another for a different child in all of this..... I just know I can honestly say that *I* haven't heard from the Lord to take this step. :}

[TXMomof4]

We're considering increasing the amount we put in every paycheck. I told dh to wait til the election, then we'll increase as much as we can.

[farmgirlinwv]

Actually I felt that the Lord spoke to me about dh's 401K this spring. So we took it out of the stockmarket, but left it in a 100% guarenteed account that gets 3.something interest. It's still in his 401K, just safe until this ride is over. Taking $$ out of 401k is almost NEVER a good idea. I think you're supposed to figure on giving about 40% back to Uncle Sam.

[Peek a Boo]

Hi, Ria! (Our dishwasher is running as we speak! ;-P). On the topic at hand, this is my sentiment as well. The real kicker for me, though, was when she said, "He felt God told him to do it." I guess it's possible God might have one directive for one child and another for a different child in all of this..... I just know I can honestly say that *I* haven't heard from the Lord to take this step. :}

 

 

another plug for ride it out/ buy low/ invest more if you can.

 

If her dh is at peace about their decision, then sure, it can absolutely be a God thing. Test everything: if he did it because of fear, then that goes against what God has given us: a Spirit of Power, NOT of fear.

 

but I'm not gonna get into whether that really applies to someone else, just offering it for our own internal analysis :D

[Sharon in SC]

Taking $$ out of 401k is almost NEVER a good idea. I think you're supposed to figure on giving about 40% back to Uncle Sam.

 

yeah, that's the figure that gives me the heebie jeebies! :-P

[Kanga]

There is usually different types of accounts within your 401K (i.e. A S&P500 fund, a fixed income fund, a small caps, fund, foreign stocks fund, etc. perhaps even company stocks). If at some point you want to move your retirement out of stocks (and if your money is in stocks, I would say wait it out, and move once they have recovered) then you can transfer your money to a more secure investment without cashing out your 401K. Some companies allow you unlimited moves per month, ours only allows 2 per month. You usually are allowed to split your contributions into different accounts so you could put say 20 % in fixed income, 30% in small cap, and 50 % in S&P (not that I am recommending that you do it that way, this is just an FYI example). I hope this makes sense. I recommend that you and your dh review his 401K policy and figure out exactly what you and how you are allowed to contribute.

[Melinda in VT]

Hi, Ria! (Our dishwasher is running as we speak! ;-P). On the topic at hand, this is my sentiment as well. The real kicker for me, though, was when she said, "He felt God told him to do it." I guess it's possible God might have one directive for one child and another for a different child in all of this..... I just know I can honestly say that *I* haven't heard from the Lord to take this step. :}

 

You know, I've seen some people make some pretty crazy decisions "because God told me to." It's not my place to judge whether or not God really told them to do it, but I don't feel at all compelled to follow their example.

 

If I think there's a good chance I should follow the same course of action, I'd pray about it, but the crazier the decision, the stronger the confirmation I would need.

[iquilt]

You can never get back the time lost in saving for retirement. By cashing in now you would be starting all over from square one, as if the last 10 years of saving never happened!

[Tess in the Burbs]

if you aren't retiring in the next 5-10 years ride it out. we too have considered cashing out but financial guy and my dad ;) say to hang in there.

 

a friend of my dad(retired) pulled a lot of his retirement money out and put it in a CD and apparently lost money.....b/c the interest rates dropped so low he made nothing....

 

so yes, wait it out. it will come back. don't look at your statements for a year, LOL

[Sharon in SC]

if you aren't retiring in the next 5-10 years ride it out. we too have considered cashing out but financial guy and my dad ;) say to hang in there.

 

a friend of my dad(retired) pulled a lot of his retirement money out and put it in a CD and apparently lost money.....b/c the interest rates dropped so low he made nothing....

 

so yes, wait it out. it will come back. don't look at your statements for a year, LOL

 

We're in our mid to late 40s. :-)

[Tap]

Another vote for riding it out.

[Amy loves Bud]

Dh has contributed the max to his 401K for more than a decade now. This is an employer match situation. I spoke with a friend last week whose dh cashed all of theirs in. (I don't even want to think about the sum total of penalty fees and taxes to be paid on a move such as that). This conversation caused me to wonder what the hive mind's thoughts are on this. Leave it in and ride the wave? Cash it all out now, no matter the fees? Conventional wisdom, of course, dictates staying in and taking advantage of the buying low principle (converse to what my friend's family has done which is to sell low). What say you?

 

Did they take it out of the 401k or just out of the stock market and into something "safer" within the 401k? You can sell trade stock and other things within the framework of a 401k or IRA. As long as you don't cash out, you don't pay the penalties.

 

I wouldn't sell stock, but I suppose I understand those who are doing it. But cashing out of the 401k - never, unless it was necessary to pay the electric bill or put food on the table.

[Sharon in SC]

The way she worded it I got the distinct impression that they "got out". :-{

[LNC]

My husband said "got out" to, and I misunderstood. Some stock funds were ready for an update (don't know the wording for that) and he switched to a money market. It's still in the 401K though.

[LNC]

My husband said we "got out" too, and I misunderstood. Some stock funds were ready for an update (don't know the wording for that) and he switched to a money market. It's still in the 401K though.

[Sharon in SC]

My husband said we "got out" too, and I misunderstood. Some stock funds were ready for an update (don't know the wording for that) and he switched to a money market. It's still in the 401K though.

 

I think it was the part when she said, "(Dh) commented that the penalty fees and taxes (to do what he did) was 'highway robbery'" that left me thinking they really got out. :tongue_smilie:

[JudoMom]

Not that I normally take financial advice from Regis Philbin, but I was watching his show one day while I was running on the treadmill and he was telling Kelly about how the only kind of gambling he liked to do was the stock market.

 

Why?

 

Because you never lose unless you sell while they're down.

 

We're younger (in our 30s) and while it looks like we've lost a lot of money, we really haven't because we haven't sold anything. I think there is a very good chance that they'll go up again, and if they don't and the economy completely crashes I think we'll be in bigger trouble than selling our stocks at a loss could make up for.

 

Dh was in bed sick this morning and when he was leaving for work I told him the market was up an insane amount. He was bummed because he wanted to buy a few things while they're low. But I'm pretty sure it's going to drop again soon (I don't think it'll steady out for awhile--maybe after the election or even possibly until the new president is sworn in).

[Sharon in SC]

I think there is a very good chance that they'll go up again, and if they don't and the economy completely crashes I think we'll be in bigger trouble than selling our stocks at a loss could make up for.

 

 

 

This reminds me of something my bil stated over the weekend when we were discussing this topic. He said the way he figures it the stock market will either recover (supporting the principle of staying in) *or* we will face total meltdown (i.e. equivalent to end of the world) in which case those who "got out" won't be in much better shape than those who didn't. :-}

So, our general consensus was that all things pointed toward "staying in" our 401ks. :bigear:

[angela in ohio]

I would be sensitive when talking to her about it. Times are a little tight, with rising prices, and if they weren't prepared, it may have been more about needing the money than getting out of the 401K.

 

Oh, and I agree, never sell low.

[Sharon in SC]

Oh, certainly. In my conversation with her I did not register anything more worthy than a, "Well, sir, what about that." :-P I am confident, though, that his motivation to do what he did was not for immediate cash.