Juggling Student Loans And Retirement

Can I cash out my 401(k) account to pay off student debt?

First and foremost, remember that if you withdrawal money from your 401(k) account before you reach retirement age (59½ years old), you'll pay a 10% percent penalty fee. So if you're trying to withdrawal $50,000 to pay off student debts, $5,000 will go to paying the tax penalty alone.

In addition, the money taken out before this age will be taxed as income. You'll be paying a lot to cash out - be smart. 

Should I put my money towards retirement or my student debt?

If you have income left over once you've met all your debt obligations, your retirement should get priority over paying more than required for student loans. Unlike your parent's generation, you won't get a pension. It's all on you to save enough for your retirement.

At the very least, make sure you max out your match. It's free money! More information on matching can be found here.

I don't make enough money to be able to put anything towards my 401(k)

We get. Money is tight and it feels like you don't have enough money to save for anything, especially retirement. But the value of time is so important - even saving small amounts when you're young adds up. 

And we've got some tips for you on how to find money to save. Check out our Tips To Find Savings post.

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