Reply to Stupid me emptied my 401k to buy a house at 42

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[quote=Anonymous][quote=Anonymous]OP, we are thinking about raiding our retirement account as well. Curious to other people’s thoughts.

DH and I are 50 and 51. We are both contributing the max with catchup contributions to our respective 401k plans ($62K per year + 14K employer matching). We have $189K and $117K in our 401k plans currently. We also have two Rollover IRAs with Fidelity from our previous jobs. Combined, we have $3.6M in those, all invested in individual stocks and ETFs and actively traded. Our IRA is up 32% YTD, up 37% over the past 1 year, up 98% over the past 3 years, and up 161% over the past 5 years.

We’re thinking about paying taxes and accepting a 10% early withdrawal penalty to pay down some debt: car loan, second mortgage. Would do it so we stay in the 35% tax bracket, but will still lose over half of what we withdraw to taxes due to penalty.

We’re up in our Rollover IRA by 32% ($875K) since January 2025, which blows the S&P 500 out of the water. Figure we could take out $200K and still be doing really well. New administration drama + active trading in tax sheltered account has been very profitable. Thoughts?[/quote]

Why not stop the catch up contributions and use that money to pay down the second mortgage and other debt?

Would make much more sense than pulling money out of your retirement savings, and the stock market is going to be wonky for at least the next three years. [/quote]

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