Author Topic: New American Piggy Bank  (Read 4847 times)

ZiziPB

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New American Piggy Bank
« on: May 06, 2014, 10:50:33 AM »
Bloomberg reporting on this new trend of cashing your 401k because you no longer can refi or HELOC your house to the max...

http://www.bloomberg.com/news/2014-05-06/early-tap-of-401-k-replaces-homes-as-american-piggy-bank.html

The scary part is the 56 year old mentioned in the article only had $10,000 in the 401k to start with...

Wolf_Stache

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Re: New American Piggy Bank
« Reply #1 on: May 06, 2014, 11:10:08 AM »
The whole thing is scary. The fact that *I* have more in retirement accounts than a 56 and a 60 y/o is just sad.

dragoncar

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Re: New American Piggy Bank
« Reply #2 on: May 06, 2014, 11:28:14 AM »
One time I was hard up for cash, and I went to my boss and told him my long drawn out sob story, then confessed I needed to take out a 401k loan.  He said "but you never signed up for the 401k plan".  Doh!

mboulder

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Re: New American Piggy Bank
« Reply #3 on: May 06, 2014, 11:35:51 AM »
Also scary:
Quote
The median size of a 401(k) is $24,400 as of March 31, with people older than 55 having $65,300, according to Fidelity Investments.

I wondered about this - did Fidelity include traditional IRA's when they calculated the median size? My 401k is around that median, but that's because I've only worked at my current job for a little more than a year. All of my former 401k's were rolled over into a traditional IRA when I quit those jobs. That IRA has a LOT more than $24k in it. So I wonder if that statistic is a little misleading.

Apples

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Re: New American Piggy Bank
« Reply #4 on: May 06, 2014, 12:59:17 PM »
Micdalli, that is such a good perspective!  I've seen similar stats to those a lot, and could never believe how little was in 401(k)s.  But if people switch jobs, then that 401(k) ends and is probably rolled into an IRA, or still at least separate from the one at the new employer.  So if you have 5 jobs by 65, you could have 5 401(k)s, and that's probably the low end. (this of course assumes the old ones weren't rolled into an IRA).  I have more hope for our country now, thank you.

kite

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Re: New American Piggy Bank
« Reply #5 on: May 06, 2014, 01:22:21 PM »
^^
Thanks.  Ever read:  The median is not the message?
Oh, sure, that essay was about mesothelioma survival estimates,  but applies to most depressing statistics.  They predictive value is low because they aren't the complete picture.  Not by a long shot.

Mrs.FamilyFinances

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Re: New American Piggy Bank
« Reply #6 on: May 06, 2014, 06:44:29 PM »
We had friends do this back in August. Both the husband and wife cashed out their 401(k). His was $16k and hers was $8k.  They used the money for moving expenses, paying the bank what they owed after selling house #1 for a loss, and making a 3% down payment on a new (like BRAND effing new) home. Bragged come tax time how they "made" $120,000 this year.....


LalsConstant

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Re: New American Piggy Bank
« Reply #7 on: May 06, 2014, 09:34:52 PM »
We had friends do this back in August. Both the husband and wife cashed out their 401(k). His was $16k and hers was $8k.  They used the money for moving expenses, paying the bank what they owed after selling house #1 for a loss, and making a 3% down payment on a new (like BRAND effing new) home. Bragged come tax time how they "made" $120,000 this year.....

WOW
The whole thing is scary. The fact that *I* have more in retirement accounts than a 56 and a 60 y/o is just sad.

I feel like that all the time reading these articles.  I sometimes beat myself up for past mistakes or not saving as much as I want, but then I realize how well I'm doing and realize maybe I'm too hard on myself.  :p

Yooper

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Re: New American Piggy Bank
« Reply #8 on: May 07, 2014, 06:54:03 AM »
I have been maxing out my 401k since I started work 3 years ago. I don't think I am saving enough at this rate, this article baffles me that people don't save more.

MrsPete

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Re: New American Piggy Bank
« Reply #9 on: May 19, 2014, 08:17:37 AM »
This just goes to show that some people will "cash out" anything they have to keep spending, spending, spending.