1 in 4 young people dip into 401(k)s to pay off debt—here's why that's a problem via CNBCMakeIt
Survey after survey shows that Americans want to become debt-free. But a significant number of young people are going about it the wrong way, experts say.
Debt can feel overwhelming: The average young adult under the age of 35 has a credit card balance of over $5,800. A 401 is a great way to save for retirement because it offers significant tax savings. You can put in money directly from your paycheck before taxes are withdrawn, which reduces your taxable income. That means you will pay less in taxes each year. And because your contributions are automatically deducted from your pay, you won't be tempted to spend those funds. Some employers even match contributions, which is essentially free money.
Long term, taking an early withdrawal also means you"lose one of the advantages, as an early adult, that's on your side when it comes to investing, and that's longevity," says Lisa Margeson, head of retirement client experience and communications at Bank of America. "Near term, it may seem like a really good idea to pull that money out and bring down your debt, but it likely has real, significant, long-term implications," Margeson says.
All Americans, regardless of age, are feeling the squeeze. Salaries just don't go as far as they once did to cover the necessities. In fact, the average paycheck has the same purchasing power it did 40 years ago, Pew Research found. When adjusted for inflation, the average hourly earnings peaked more than 45 years ago, according to Pew. A $4.03 hourly wage in 1973 had the same purchasing power that $23.68 would last year.
इंडिया ताज़ा खबर, इंडिया मुख्य बातें
Similar News:आप इससे मिलती-जुलती खबरें भी पढ़ सकते हैं जिन्हें हमने अन्य समाचार स्रोतों से एकत्र किया है।
Trump executive order brings scrutiny to environmentally conscious 401(k) investmentsAs regulators review energy investments in retirement plans, experts weigh in on what that could mean for burgeoning ESG investments.
और पढो »
Even 75% of Americans in the best 401(k) plans won’t have enough to retireMany workers don’t save enough for retirement or undermine themselves — still, there are a few fixes.
और पढो »
Your 401(k) could make you a millionaire—here’s how one man did itFritz Gilbert started setting aside a portion of each check in a 401(k) in 1985. By 2013, he had $1 million.
और पढो »
The golden rule of personal finance is to never, ever touch your retirement savings. Here are three instances in which it might be OK to break that rule.
और पढो »
From 401(k) cash outs to splashy weddings, here's America's biggest money regrets, as told to CNBCFrom 401(k) cash outs to splashy weddings, here's America's biggest money regrets, as told to CNBC. investinyou (In partnership with acorns.)
और पढो »
A simple strategy can make retirement savings less complicated, no matter how many jobs you've held and accounts you've openedIf you are hoping to roll over your existing 401(k) into a rollover IRA, here's how it works.
और पढो »
From 401(k) cash outs to splashy weddings, here are America's biggest money regrets, as told to CNBCFrom 401(k) cash outs to splashy weddings, here's America's biggest money regrets, as told to CNBC. investinyou (In partnership with acorns.)
और पढो »
The $51,000 mistake 1 in 4 young retirement savers has already madeOne in four adults under 35 with a 401(k) has already made an early withdrawal. The reason? Largely, their credit-card debt
और पढो »
I paid off $40,000 of student loans in 2 years. Here's my best advice on choosing which debt to pay off firstWhen you have multiple debts, it can be hard to decide which debt to pay off first. In reality, the best method is the one you'll stick with.
और पढो »
37 Things For People With A Sense Of Humor That's A Little...Off37 Things You'll Love If Your Sense Of Humor Is...Different
और पढो »
Facial recognition is almost perfectly accurate — here's why that could be a problemFacial recognition is a powerful tool. The accuracy rate is almost perfect, especially when fed with enough data. Here's why it needs to be regulated.
और पढो »