Risks of 401(k) Loans

Jeff Rose of US News offers up this great synopsis of the risks of borrowing from your retirement account. He summarizes these key points:

  • Lost earning opportunities.
  • Many people also stop their retirement account contributions when they borrow from their retirement account.
  • Without compound interest working on your behalf during the time that you have removed money from your retirement account, you could fail to accumulate a significant egg.

He follows with tips on managing the risks of borrowing if you truly have no other choice:

  •  Borrow as little as possible
  • Repay yourself as quickly as you can
  • Keep making contributions
Full text of the article available on US News. Bottom line: think before you borrow money from your future self. Your future self will thank you!
– Eric

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
This entry was posted in Executive Benefits, Non Qualified Retirement Plans, Qualified Retirement Plans, Retirement, Retirement Plans. Bookmark the permalink.

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