By Patricia Uceda, Spring 2015 Graduate Research Assistant
As tempting as it may be to make early withdrawals out of your retirement savings, don’t. Money you withdraw from a traditional 401(k) is taxed. Early withdrawals (before you are 59½ years of age) generally result in a 10% penalty. And, your retirement nest egg will shrink.
Instead of looking to your retirement plan, set up an emergency savings account. Work emergency savings into your budget – even $50 dollars a month into a separate savings account will keep you from raiding your 401(k) in an emergency.