Your Financial Future:
Ask The Experts
WISER’s Panel of Experts is comprised of leaders from our National Education and Resource Center on Women and Retirement Planning, as well as other partner organizations who work on the diverse issues that impact women’s financial security.
Anna Rappaport is an actuary, consultant, author, and speaker. Anna is a nationally and internationally recognized expert on the impact of change on retirement systems and workforce issues. Read more.
Perspective from Anna: Women and Retirement Security
Anna has highlighted key reasons why so many older women are either poor or near-poor in retirement and she discussed topics that have stood out to her on the issue of women's future financial security in a recent article published in Pension Section News.
To read more click here.
Q: In this economy, what is the best strategy when it comes to my 401(k)? Should I keep adding to it, or should I abandon it in favor of a new retirement savings plan?
A: Stay in your 401(k), particularly if it has a match. If you save elsewhere, you will not get the match. The exceptions to this would be:
- If you are uncomfortable with the investment options in the plan or think you can do better elsewhere, you might prefer to save elsewhere. But remember, unless you save in the 401(k) or an IRA, you will not get the opportunity to save pre-tax dollars.
- If you do not get a match and if your employer does not offer a Roth 401(k), you might prefer to use a Roth IRA.
- If you are not paying taxes now, you might prefer not to save in a tax deferred plan, since you would have to pay tax wne you get the benefits.
- If you want to save in a program where you have the option to withdraw the money if you need it, you will need to use a different program.
Q: I need money from my 401(k). What are the consequences of withdrawing money from my 401(k) while I'm still working? Also, are there consequences if I just stop contributing until I can afford it again?
You can't withdraw money prior to retirement except in the event of hardship, and even then you have to pay tax on the money plus a penalty tax. Hardships are defined in the plan and that is the only reason for early withdrawl.
If your plan offers loans, you may be able to borrow some of the money.
There are no consequences of temporarily dropping out except that you will have less retirement savings and get less match. The plan may have restrictions about when you can rejoin.