Here's a simple and short piece from Yahoo that discusses a basic financial fact: it's almost never a good financial decision to withdraw money from an IRA -- instead, you should let it sit and grow and grow and grow. Here are the details:
Every day situations arise or an itch for a gadget that got great reviews which might tempt you to borrow money from your IRA before age 59 1/2. Don't do it. The price you ultimately pay is too steep.
Had Jim been able to resist the new ride, or been able to come up with the money without touching his retirement funds, he would have been a lot better off. Had he just let his IRA ride it out for the next 30 years (at the stock market's average annual returns), it would have been worth more than 20 grand.
There are times, however, when dipping into IRA money is the only way to get by. Perhaps you've eyed your IRA savings when facing higher education costs. Or maybe you're a first-time homebuyer who needs a loaner to cover some of your costs. Maybe your family has been sacked with catastrophic, unreimbursed medical bills that you can cover only with money earmarked for retirement. For those with limited resources, delaying retirement may be the only option.
Here's a better thought than withdrawing money from your IRA: save for expenses -- both anticipated and unexpected. For anticipated expenses like college, replacement of cars, appliances, etc., and the like, develop a systematic way of saving for these expenses so you can pay cash when they occur. For unexpected expenses, set up an emergency fund. Free Money Finance recommends Emigrant Direct as a good place to store your cash until you need it.
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