If you want to make a big purchase, such as a new car or a piece of property, or you were faced with a large, unexpected expense, such as a major home or auto repair, would you have the funds readily available? If not, you might look at what may be your biggest pool of money — your 401(k) or IRA. But should you tap into these accounts well before you retire?
Maybe not — and here’s why:
• Less money in retirement – The more money you invest in your retirement accounts, and the longer you keep it invested, the more you’ll probably have when you need it most — when you’re retired. Consequently, taking out sizable amounts from these accounts before you retire could be costly, as it would disrupt the benefits of compounding that can be achieved by holding investments for the long term.
