Ask Terry Questions Retired — 401k withdrawal

Retired — 401k withdrawal

By Terry Savage on August 17, 2019 | Financial Planning / Retirement

So I retired at 64, I have a 401(k) from my company have not started withdrawing yet I did take Social Security but with this China in the stock market I don’t wanna lose anymore money should I withdraw it and put it in a rollover until I start withdrawing. And when can I start withdrawing it now or should I wait until 65? this is my only money to live on

Terry Says

I am so sorry you started taking SS early — before your full retirement age.  That is a huge penalty — and if you just did it, you can contact SS in writing and reverse that decision —  paying back any money you have already received.  Doing the math from your question, I’m guessing that it has just been a few months.  The reason to do that is every year you take SS early is like losing out on an 8 percent gain in your benefits — something I doubt you will get in the next 5 years in the stock market.  And the SS increase is a no-risk situation!

Do that reversal of SS — and then your next move should be to do a DIRECT IRA ROLLOVER to a place like Fidelity or Vanguard. They will handle all the details.  And they offer a wider choice of safe investments than most 40l(k) plans which are designed for growth.  When you move half of your IRA money into a safer choice — perhaps a money market mutual fund — you will be able to ride out any decline with the rest of your money in a “balanced fund”.  It’s important to have some stock market growth because you may have as long as 30 years in retirement! Stocks can offset the impact of inflation.

Remember, at even just 3 percent inflation, the value of your money will be cut in half in 25 years!  (Social Security will give you an inflation adjustment every year — and by delaying to get a larger “base” for SS, you’ll be farther ahead.   If necessary, withdraw some money from heh 40l(k) to pay back the SS you have received in the past few months.  Those are the smart moves to make right now.

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