What would you do $$$ ??? 401K

afterburn 549 · 02-21-2009, 10:40 AM

friend of mine who is a 56 y.o.
His 401k, has shrunk to 25000 !!
He went through the divorce (insert Ya DE DA song here) wife got house
His business is faltering like... everyone ..??
I think he should take the 401 and bail..use it as a dwn payment and at least get a place to live rather then rent,,, as houses are coming down
Get some equity going B4 the loans take a hike and inflation goes crazy..
What ya think ??

cgarr · cgarr's Garage

It only shrunk 25K if he takes it out.

I am socking as much in mine right now because its cheap!

Wickd89 · 02-21-2009, 11:10 AM

Sad.
What did he max out with?

I took a hit, like everyone else, but I went to serious cash posiition about 8 months ago.
I have had 401k + IRA accounts since I was 19, and it has been a good vehicle to build up money for those later years.
Sad thing is that many people start saving late.... Most of my friends are living in the here and now, and quote this economic turn town to validate their decision. I tell them, that even with all the losses, most investors are still up..

gassy · 02-21-2009, 12:01 PM

that 25k, once in hand, will be more like 15K. Penalties and tax...

SuperXRAY · 02-21-2009, 12:08 PM

That doesn't matter either, as the last $1.5 trillion just socked the U.S. Dollar by approximately 31 cents. So, even sitting in the market, that 25k is realized at only
$17,250. You'd be better off taking it out now and buying platinum or gold, though gold is likely to be considered worthless for national trade in regards to the U.S.

pwd72s · 02-21-2009, 01:28 PM

sounds like your friend is sunk! As others have suggested on other threads...hookers and blow...

masraum · 02-21-2009, 01:48 PM

Leave the money in and hope that in 9 years it's worth $50k because the stocks have gone back up.

If you take 401k out early, they take 20% off the top and then penalize you another 10% on April 15.

pwd72s · 02-21-2009, 02:38 PM

Quote:

Originally Posted by masraum

Leave the money in and hope that in 9 years it's worth $50k because the stocks have gone back up.

If you take 401k out early, they take 20% off the top and then penalize you another 10% on April 15.

True...penalties beckon...

Hugh R · 02-21-2009, 02:38 PM

I think I lost that much this last week...., Seriously!

pwd72s · 02-21-2009, 02:55 PM

I don't play with your number of zeros, Hugh...I lost "only" enough to buy a new GT3. But then, I didn't want a GT3 anyway...

jtfreels · 02-21-2009, 05:21 PM

I'm guessing you might be better off buying the GT3, it should appreciate more than my 401K might in the next 10 years.

afterburn 549 · 02-21-2009, 06:44 PM

I guess it does not matter what he started with...9 years he will be 65 and renting/ hoping the stocks went up ?
Is that every ones take ?
Or loose in the stock game but buy in the house game now ..?

pwd72s · 02-21-2009, 07:17 PM

Stocks AND houses may still have a ways to fall. Whic is better? Hanged with a new rope or the firing squad?

Bill Douglas · 02-21-2009, 07:24 PM

Quote:

Originally Posted by Hugh R

I think I lost that much this last week...., Seriously!

Las Vagas?

vash · vash's Garage

the very last resort is to take out 401k money. he is still like 100 steps from last resort. last resort usually involves cancer, or something like that.

he will get slammed with taxes and penalties. leave it.

Heel n Toe · 02-21-2009, 09:02 PM

Quote:

Originally Posted by afterburn 549

I guess it does not matter what he started with...9 years he will be 65 and renting/ hoping the stocks went up ?
Is that every ones take ?
Or loose in the stock game but buy in the house game now ..?

If I were in your friend's situation, I'd leave the money in the 401K and hope it climbs back up in value... and rent and not worry about building equity right now.

He's thinking about that magic number of 65 as the earliest age he can think about SS and retirement, right?

If he's thinking about retiring at 65, he may need to adjust that and think about working 5-10 more years after that if he's able.

This thing has caused a lot of people to rethink when they'll be able to afford to retire.

There's no shame in renting. If our situation morphed into something that caused us to have to rent, I wouldn't stress about it.

Good grief, think about how much one pays out beyond the loan amount after 30 years anyway... is the house usually worth that much when you finish paying? Probably not. That's why so many people try to pay it off early.

I have a 57-yr. old buddy who got divorced 2 years ago (no children)... he and his wife split amicably, but he stayed in the house. He had to pay her $35K based on what the house was appraised at minus what they had left to pay. He refinanced to cover that and rolled it all into a 30-yr. loan to keep the payments as low as possible.

He has been trying to buy a rental home each year for the last 3 years, and he sets those up on 30-yr. loans, too.

If it all works out, he may be sitting pretty sweet, but he told me he's not worried if he dies before all the loans are paid off, because he won't be leaving a big debt to any heirs or anything.

He's just taking his best shot at it all working out, hoping he's setting himself up a decent retirement plan "to supplement his SS check" when he decides he can afford to retire.

Tell your friend not to rush into buying anything... unless there's some kind of rent-to-own thing he can work to his advantage. I don't know how those work, but I have heard they're out there.

dd74 · 02-21-2009, 09:53 PM

Simple: don't touch the 401K.