Nearly Half of 40-Somethings Are Making This Dreadful Retirement Mistake
Life has a way of costing us more money than expected. Your car could break down, your home's HVAC system could fail, or you could wind up in the hospital with a string of medical bills to cover. Ideally, you'd tap your emergency savings in situations like these. But what if you don't have any money tucked away in the bank? In that case, raiding your retirement savings might seem like the only solution.
It's an option that 46% of Americans in their 40s have already exercised, according to a new survey by TD Ameritrade. But while tapping your IRA or 401(k) when you need money might seem like a good idea, it could backfire.
When you contribute money to an IRA or 401(k), you get a pretty nice tax break. With a traditional IRA or 401(k), your money goes into that account tax-free. With a Roth IRA or 401(k), your money grows tax-free, and you don't pay taxes on the withdrawals you take as a senior.
Source Fool.com
