The old normal: Retirement money was as untouchable as Elliott Ness.
The new normal: Retirement funds get raided like a Chicago speakeasy.
Solution: Consider the total cost of cashing in early.
Rocker Bruce Springsteen wasn't singing about 401(k) plans when he warbled, "You can't walk away from the price you pay." But he could've been.
In August, Fidelity Investments reported a 10-year high in workers making early withdrawals from 401(k)s and a record in folks taking 401(k) loans.
If you need your 401(k) as a lifeline, analyze why. Then, you can better anticipate future needs. ''When the money is gone from the plan, it's not working for you,'' says Beth McHugh, vice president of marketing insight for Fidelity Personal Work Place Investing.
McHugh acknowledges that a 401(k) loan may be preferable to increased credit card debt. But there are definite downsides. For example, if you leave or are laid off from your company, you must repay a 401(k) loan within 60 days or pay income taxes and a 10 percent penalty. Similarly, early withdrawals are taxable, and carry a 10 percent penalty.
Longer term, the price you pay is a diminished retirement. "You're putting your retirement future at risk," McHugh says.