I'm never going to be able to retire. Should I cash out to get myself out of debt?

Submitted by WinsomeWombat t3_z88khp in personalfinance

I'm 38, I make 44k a year, I have maybe 10k in a pretax retirement fund and 2k in debt. Because of a job change, I have not been able to contribute for a year.

Like everyone right now I'm really struggling, but even if things were twice as good, I still wouldn't be able to ever retire by any stretch. Things are so tough I'm considering just taking it all out and dealing with the fallout. Exactly how foolish would that be?

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SpiritualQuokka t1_iyacbk8 wrote

You are almost certainly going to retire. Most people live long enough to have health issues that require them to reduce their income due to needing to work less or change jobs. In addition, age discrimination is real, finding and keeping a job as you get older may become more difficult. You can choose to take this money out now and have nothing for when that happens, or you can leave it in to grow and at least have something. In most cases, something is better than nothing.

Figure out a way to solve your debt issue with your current income, and start looking at ways to earn more, that's the solution to both problems.

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BouncyEgg t1_iyac6vx wrote

> Exactly how foolish would that be?

What kind of scale would you like to provide?

Not foolish to Foolish? Very foolish.

0 (not foolish) to 10 (foolish)? 10, maybe more.

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grokfinance t1_iyacl6m wrote

Ever is a long time. You have no idea what will happen in the future. no, you shouldn't cash in your retirement. The less money you have and the worse financial shape you are in I would actually argue the more important it is to not cash in your retirement accounts. Retirement accounts (especially 401k) are generally protected in bankruptcy.

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Kirrby357 t1_iyakad1 wrote

38 is young. Depending on where you live, 44k is not great. Do you have a good driving record? Any chance at getting commercial driver license? A vocational night school to go to? Putting your name in line for a local labor/construction union? There is a lot you can do to improve your income. 2k in debt is NOT that bad. There's light at the end of the tunnel and you have plenty of time!

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MikeWPhilly t1_iyazyet wrote

I would say listen to this + Contranovae. There are a lot of union jobs that pay well from commercial drivers to even USPS (they are hiring in a lot of parts of the country). Even a state/fed job would be a good option.

As to retirement as Contranovae said it’s very easy to retire in other parts of the world.

So yes it’s a bit foolish to cash out. Focus the time towards new job opportunities.

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BogBabe t1_iyantgm wrote

It would be beyond foolish to decide at the tender age of 38 that you're "never going to be able to retire." Although, if you sabotage your financial future sufficiently, you'll probably be correct.

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Contranovae t1_iyaivyp wrote

Almost every American can afford to retire but not in the USA.

Google cheap countries to retire in.

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NoReallyLetsBeFriend t1_iyac7wa wrote

2k in debt, but are you paying on it? High interest? A 10% early withdrawal on a 401k or IRA would likely be less than 14-29% interest on say credit card debt. But it's this $2k going to keep growing because you can't afford things?

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dcdave3605 t1_iybfyot wrote

You have a very long time to work.

Focus on improving your career prospects and therefore your income.

I was 30 and making $40k and barely had any retirement savings. I Got my masters, left my field of social work and started making 70k and now 90k by age 38.

Now I max my wife and i's retirement accounts each year and if we keep up the efforts we are making (living cheap and saving a lot) we will retire at age 50.

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FckMitch t1_iyasjn7 wrote

Can u take a $2k loan from 401k and pay off the $2k debt? Then take a part time job or seasonal job on weekends/nights or sell plasma to pay back loan.

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