PRACTICAL MONEY SKILLS: Avoid tapping retirement plans early

Published: Tuesday, March 25, 2014 at 11:21 AM.

Finally, if you borrow or withdraw your retirement savings, you'll sacrifice the power of compounding, where interest earned on your savings is reinvested and in turn generates more earnings. You'll forfeit any gains those funds would have earned for you, which over a couple of decades could add up to tens or hundreds of thousands of dollars in lost income.

Bottom line: Carefully consider the potential downsides before tapping your retirement savings for anything other than retirement itself. If that's your only recourse, consult a financial professional about the tax implications.

Jason Alderman directs Visa's financial education programs. To participate in a free, online Financial Literacy and Education Summit on April 2, 2014, go to www.practicalmoneyskills.com/summit2014.



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