60% of Retirement Savers Who Made This Financial Decision Regret It
According to a report from advisory firm Edelman Financial Engines, 60% of retirement savers who've borrowed money from their 401(k) regret the decision to tap those retirement funds. As well, 80% of borrowers say they didn't understand the implications of the loan prior to accessing the cash. Those implications include a likely reduction in take-home pay, along with missed contributions and lost earnings over time.
If you're considering a 401(k) loan, minimize the post-transaction regret by estimating the full costs and consequences of the transaction -- before you act. Here's how to do it.
According to a recent Vanguard study, the median 401(k) balance is roughly $22,000. Let's assume your balance is in line with this median and you want to borrow $20,000 of it. That loan amount is possible, but only in 2020 -- coronavirus relief efforts temporarily raised the maximum 401(k) loan amount from 50% of your balance to 100%.
Source Fool.com
