Benefits Of The Eatk 401k Withdrawal Penalty
The early 401k withdrawal penalty isn’t exactly the best part of the plan. It does stink not to be able to take out your money early. But it can really help people keep their money in their account. In fact it can help in these following ways.
1. Stops Foolish Spending
Many people will buy things for foolish reasons. There is just something we all have that makes us want to buy new things. The fact that most people live paycheck to paycheck without putting away any money into a savings account is the major reason why 401k plans exist at all.
There are always new gadgets coming along like the iphone which makes us all want to pull strings to get a hold of them, this can make us justify getting out a early 401k withdrawal by convincing ourselves that we will pay it back. Even thought that will never happen, and it a 401k might not even be possible if you are already contributing the 401k maximum contribution.
By there being a small little penalty out there we may stop and think about it again.
2. Helps People Look For Other Alternatives
People have to look for new ways of getting the things that they want if they cannot use their savings as easily. No one wants to be forced to think outside of their comfort zone, but it can have a lot of advantages.
For example, if you want more money you might start a business or invest into something else. Each helps to boost the economy and making life a little bit better for the future generations as a side effect.
3. Helps People Realize How Important Retirement is
People rarely want to think about what will happen to them once they retire, it is just too far away to even consider. Many people don’t like to think any further then what is going to be their net meal, so something that will happen to them in 40 years doesn’t seem that important.
401k plans in general help keep the public aware and planning for their future, but the early withdraw penalties is the stinger that consistently reminds people about its importance.
