VINTON, Va. – Figuring out what to do with your finances right now can be a little tricky. We’re working for you, giving you options from local experts.
Some people may look at their 401(K) as a backup option, but financial experts want you to know that’s not a risk you want to take.
Gretchen Beedle, a financial adviser for The Conner Group in Vinton, recommends not dipping into your 401(K) because of three major drawbacks.
- If you take money out now while the market is down you won’t recover from recent historic losses
- You will have to pay taxes on pre-tax savings and a penalty if you are younger than 59 1/2 years old when you take that money out
- Qualified retirement savings are generally protected from creditors
“Honestly, your 401(K) should be the last resort in difficult times. While it might seem easy and accessible, dipping into your retirement savings has major drawbacks. If you are struggling financially you should look at any and every local resource first,” said Beedle.
She also suggests in tough times to pay attention to what our political leaders are doing.
Last week President Trump signed the Family First Bill last week that could give money to small businesses to cover the cost of paid leave for their employees. Then early this morning senate reached an agreement on another stimulus bill.
“It doesn’t hurt to talk about unemployment insurance or have discussions with your landlord or mortgage company to try and reduce your cash needs in the long term. If you’re feeling that stress and that pressure I would look at those options to try and help you," said Beedle.
She also mentions you don’t have to be a client to reach out and ask an adviser for guidance especially during times of uncertainty like this. For ways to contact The Conner Group click here.
Another financial group, Focus One Integrated Financial Planning adds some other helpful advice.
- First, do a household budget review to see where you can curb spending
- The first place to check for more money is an emergency fund you may have of 3 to 6 months of savings
- If you have a home you could use some of your equity in the house with an equity line.
- If you have an IRA you can use the 60-day rollover provision, but you would have to pay the amount you took out within 60 days to avoid taxes and penalties
Again, financial experts stress the importance of reaching out to your consultant or adviser and if you don’t have one you can still reach out.