View Full Version : Please, I need advice on cash out/in of retirement account
Hi, folks--Hope this summer evening finds you all doing OK.
Now, before anyone says so, I know it is really bad advice to cash in your 401(K) because of the various penalties and taxes (not to mention losing your retirement savings). But here is the situation. I have been out of work for two years. I have about $2K left in the bank, no debts, thankfully. I have been looking for work with no luck at all. My last resort was signing up with a temp agency. I applied for two positions online with Kelly Services (they used to be the "Kelly Girl") people. Got a response that if I qualified, they'd be in touch. I can do secretarial work, plus I was a newspaper reporter and public relations person for 15 years total. Tomorrow I am going to another temp agency to see what happens.
I am a total loss as to what to do next. I don't really have the sort of stuff you can sell and make money with. Most of the stuff I own came from the Salvation Army! :laff: I live as frugally as I can. My mother knows the situation I am in, and she has money, and has given me money in the past, but it's almost all gone (due to COBRA payments, living expenses, etc.) I feel weird about asking her for more, when she KNOWS I am in trouble. I think she has some idea that all I have to do is go to the right temp agency and a magic bell will ring or something.
I live in a depressed area w/one of the highest unemployment rates in my state. So, working as a dog walker, housecleaner, etc., is not going to do it.
Should I go for the cash in/out? Because I'll tell you, I have had constant stomachaches, panic attacks, and thoughts of suicide on a daily basis. At the rate I am going, I won't live to enjoy retirement.
Your thoughts?
Edit: I am usually told I am overqualified for the clerical/other type of work anyway.
ApatheticNoMore
8-3-11, 1:43am
For the resume:
- Possibly dumb down your resume some for clerical work. If you have a very professional resume, it is probably not the one you should use for this type of position. This is to deal with the "over-qualification" problem.
- You don't want to have more than your latest 10-15 years at most work history on your resume anyway. If you have work history older than that remove it. That may be a nod to age discrimination but it is the advice they are giving out these days.
As for money:
- You probably qualify for some government assistance. It won't pay your bills entirely, you still need money to live, there is no general "ran out of unemployment, can't get a job" assistance. But there is: food stamps for which you almost certainly qualify, sometimes ways to reduce your utilities costs if you fall under a certain income (ask your utility companies they will know), in a few cases ways to reduce housing or medical costs.
- It is possible you could also get some charity help especially with food and the like. You could also learn to dumpster dive your food. Yea I know, that is out there, just saying there are options to get *some* of the things we need to live.
- There are probably ways to get money short of cash out *IF* you really are prepared to bet on landing a job soon. You could maybe borrow against the 401k rather than cashing it out. You could max out your credit cards if you have them (not desirable of course, just a desperate measure for money to live on, especially if hope is in sight).
- Clearly moving out of the depressed area seems like one possible plan. You could maybe just start by sending your resume outside of the area and seeing what responses you get?
Noone can manufacturer jobs with a wave of the wand when there just aren't any jobs! But there are still some possible things to try.
Thank you for replying.
I already have a dumbed-down resume for clerical work. Still, no one responds to it since I have been out of the clerical field for 15 years, actually. The last time I was a secretary, they were still using typewriters and carbon paper. Voice Mail had just come into existence.
According to my state, if you have more than $2K in assets, they won't give you anything other than food stamps (of which I get $16 a month, wow). I have no idea about the utilities--tho I did get a heating grant for $300 last fall. I will not max out my credit cards. By the age of 23 I was $10K in debt, and I will never go back there again.
But I'll sleep on some of your suggestions. Maybe something will come up. Thanks again.
Apathetic had some great ideas. Here are a few more thoughts/suggestions - is it possible to move in with your mother and share expenses? Or have her move in with you?
When you got money from your mother, was it a gift or was it more like borrowing that you could pay back when you could? Maybe "borrowing" money with the intention to pay back would go over better in your mind.
Personally, I would dip into the 401k if you had to. I have done so myself when I became disabled and couldn't work. But leave that as a last resort. It's only a stop gap measure. Eventually you will have to somehow generate income.
Have you tried working with a job search focus group to help you with your resume, what types of jobs to go for with your experience, or something related but new you could get into with a few months of training. Around here there are several job groups/services which are free or have very inexpensive dues.
For example, if you updated your secretary skills with a Microsoft Office certificate you would probably get more offers. I have a friend looking for Customer Service Rep work who is doing this. It's a 3 month program which is free (I think it's training paid for by the state?)
I would ask the temp agencies about the types of skills they're looking for too and then get them if you don't have them.
ps. in 80% of the US you can call 211 which will connect you to United Way and social services. Chances are, this service is in your area. Then you can find out what kind of services you qualify for.
I would also consider moving in with someone - or getting a roommate or two yourself. It can drasticly cut expenses and doesn't have to be a permanent thing - just until you get back on your feet. You may also consider taking whatever small amount of money you have out of the bank to make yourself qualified for more social services. If you are down to your last $2K anyways then it probably doesn't matter. And I would seriously ask Mom for financial help AFTER I found a way to reduce my expenses as much as possible. While she may know that you are struggling, she may not know how dire it is. And you msay also consider getting some kind of loan even if you are adverse to it. If you have good credit and a credit card you can often get one of those "0% for one year" kind of deals for a 3% fee (rolled into the balance). It might be just enough to tide you over. And keep plugging away at jobs. Look for jobs anywhere - I see lots of places looking to hire unskilled type of jobs - retail sales, cashiers, etc... - which, again, doesn't have to be permanent just something to tide you over while you look for something better. I would also dip into the 401K as a last resort but only after I cut my expenses back as far as I could - Rommmates, downsize my housing, downsize the car, use public transit, ride a bike, get rid of cable, internet, and 2nd phone, eat rice and beans and beans and rice (to quote Dave Ramsey) everyday, unplug everything and only use utilities sparingly, etc... Lots of things can be cut back in times of need, try those. Live like a starving student before tapping into the 401K if possible.
You might want to look at individual insurance either through a private carrier, your state's blue cross/blue shield, or your state's high risk pool (if applicable)... or just go without insurance; tough choice either way.
Contact your 401(k) plan administrator. Many plans offer hardship withdrawals and those do not incur early withdrawal penalties. You will still owe taxes and it will be treated as gross income for that year. There is a narrow band of what constitutes hardship and the IRS offers some info here: http://www.irs.gov/retirement/article/0,,id=162416,00.html Your plan admin will be able to walk you through the rest.
Of course, right now is the worst time to tap into your 401(k) but if it comes to it then it might not be as horrible an option as you think.
Also, consider moving at least temporarily for work?
benhyr has some good advice. you also don't mention where you live and what your personal situation is. for example, if you're a single person living in detroit I'd suggest moving somewhere else. The likelihood of your finding a job there is pretty unlikely, and if you're single then moving to somewhere with better prospects would likely make sense. The other thing to consider re: the 401k, if you're truly earning so little then you won't owe a whole lot in takes on the withdrawal. if you don't qualify for a hardship withdrawal I expect you'll still get hit with the 10% penalty, but much of the 20% withholding for taxes will likely come back to you as a tax refund next spring, as long as your overall taxable income remains low.
Your situation isn't great, but the fact that you have no debt puts you 20 paces ahead of so many other people. Hopefully you'll find work before you get to that point. Good luck to you.
Rollover your 401K to an IRA and set up a SEPP withdrawal plan, which you will have to continue for at least five years and until you reach at least 59 1/2 years of age. This withdrawal will be an annuitized amount for which Fidelty provides a SEPP calculator.
I am wondering if you are with the right type of "temp" agency or are unnecessairly limiting yourself by asking for the wrong type of work.
My employer gets everything from $10 an hour "clerk" type people to probably $75 an hour technical types from "temp" agencies, so I know there are at least some that can place a larger variety of skill sets.
Thank you for the many suggestions.
I am married, I don't live in Detroit but our area is depressed anyway. Moving is not something I want to do; my mother is elderly and depends on us (not physically--yet).
The temp agencies are offering $10 call center jobs (long term). Whatever happened to, say, three weeks as a secretary here, and then four weeks at another place? This area seems to stink for temp agencies, too.
I'm telling you, I've applied for retail jobs and people won't talk to me or if they do they say "you'll just leave when something better comes along."
These times are unbelievable.
We cannot move in with someone else, we rent and cannot sublet or have a roommate, I have no cable, if I cut the Internet there goes a vital link to job searching, I am running one car that gets 35 mpg and has no loan. What the heck else am I supposed to cut? We don't even eat meat!
Sorry to sound so angry but I feel like I've been screwed over in so many ways.
I hear you. I've been out of work for two years in a depressed area. People tell me to "settle" for an entry level job - they just don't get it that other people have already taken those jobs! And employers shy away from someone whose age and history suggests they expect more and will leave soon. I have had zero luck with temp agencies, either temp or temp-to-perm.
I've been drawing on my IRA. It will last two more years. Then I'll be 59 with no financial cushion.
My condo is on the market and as soon as reasonably possible I'm moving 2 hours away to a city with a larger job pool. Still a high unemployment RATE, but a larger number of employers, and more of the kind of work I do.
The only suggestion I have is to look in to home care companies like American Home Companions, Home Instead... those jobs are also hard to get due to everyone else applying as well, but the hours are flexible and the work is not too demanding, and it is one area where they actually prefer maturity since it makes you more likely to understand the old folks. These are not medical or physical care situations, it is more driving them places, helping shop and prepare meals, light cleaning.
A call center at $10 an hour is about as good as it gets around here - what prevents you from taking a long term temp job like that?
poetry_writer
8-19-11, 11:13am
I have been unemployed since November. If one more person tells me "oh just take anything...fast food...waitress...to get by" i will scream. No one is hiring, not even fast food. if they do have an opening they hire younger employees. I am limited somewhat, cannot stand for long periods or heavy lift due to a health issue. I have applied for hundreds of jobs. People say 'well move" right. In my area you have to sign a years lease on apartments. and move where? without a job? stupid. People say well in my area you can get this or that for $10 an hour. Cool if I lived in that area! Just venting here. I am sorry for what you are going through, I know how rough it is.
Aqua Blue
8-19-11, 12:26pm
Moving isn't usually the answer. I live in an area that wasn't hard it by all of this. But that doesn't mean there are jobs. It only means that there never have been much for jobs and that hasn't changed.
ApatheticNoMore
8-20-11, 2:10pm
If one more person tells me "oh just take anything...fast food...waitress...to get by" i will scream. No one is hiring, not even fast food.
I think this is a BAD STRATEGY in terms of landing a job (yes any job). Everyone and their brother is competing for jobs that require no skills and experience. I don't think it's good strategy to compete with them. I think it's better strategy to try to get a job in line with your skills and experience as you will then only be competing with other people with those skills and experience. Even if your skills aren't the shiniest and your career path not the straightest, and your field overcrowded, unless your field has completly gone belly up, I think you are still better off trying to cash in on your skills and experience, as it is the ONLY thing that makes your more qualified for a particular job than a random person on the street. Flaunt whatever it is you've got.
I guess people assume there is less competition for minimum wage jobs or whatever because afterall who would want minimum wage? In this economy: lots of people. I'm tempted to say: the ENTIRE POOL OF THE UNEMPLOYED even those who don't get counted in the official unemployment statistics! But actually many people who do get counted can last on unemployment for awhile. But basically anyone who really needs or really wants (high school kids often really want but don't need) a job.
A call center at $10 an hour is about as good as it gets around here - what prevents you from taking a long term temp job like that?
My pride, plus the fact that I am probably very likely to yell "eff you" at a complaining caller and then hang up.
Thank you, thank you to those of you in similar shoes who are ready to scream at the ludicrous suggestions people toss at you! Thank you too for listening!
It's so hard to stay motivated. I had another rejection today--this one was for something that I would have been happy to do, but again, was overqualified for. (excuse bad grammar).
For now, we're not moving.
what about your husband is he working
What if you explain to your landlord what the situation is? I'm guessing he/she would prefer you getting a roommate than you breaking the contract and moving out. Look back at your lease in terms of what your options are, esp if it's a possibility to move in w/ your mom. Since she's the primary reason you aren't considering moving, and since you're renting, it could be a decent choice. But figure out first what the consequences are to get out of your rental. The whole point of renting is that it's more flexible than owning, so it's asinine if you can't just move if you really need to (whether in w. your mom or some other situation).
As for the call center job, well, they probably have high turnover which means they don't expect you to stay forever. Sometimes just having a job is better than having no job, though you will have to decide for yourself whether it's worth it. Best of luck.
iris lily
8-24-11, 10:31am
What if you explain to your landlord what the situation is? I'm guessing he/she would prefer you getting a roommate than you breaking the contract and moving out. Look back at your lease in terms of what your options are, esp if it's a possibility to move in w/ your mom. Since she's the primary reason you aren't considering moving, and since you're renting, it could be a decent choice. But figure out first what the consequences are to get out of your rental. The whole point of renting is that it's more flexible than owning, so it's asinine if you can't just move if you really need to (whether in w. your mom or some other situation).
As for the call center job, well, they probably have high turnover which means they don't expect you to stay forever. Sometimes just having a job is better than having no job, though you will have to decide for yourself whether it's worth it. Best of luck.
Good advice.
No, he is not.
what about your husband is he working
Your suggestion is a very good one; however, our landlord fits more in the category of "slumlord". I'd rather not go into the specifics, but a roommate is not going to work. We could break the contract as there really isn't one, but the deal on this place is so good we'd be big fools to leave (we'd never find another rental as cheap with as much to offer). It is way way better than buying. But thank you anyway. If my landlord were a normal person, I'd consider it more! :)
What if you explain to your landlord what the situation is? I'm guessing he/she would prefer you getting a roommate than you breaking the contract and moving out. Look back at your lease in terms of what your options are, esp if it's a possibility to move in w/ your mom. Since she's the primary reason you aren't considering moving, and since you're renting, it could be a decent choice. But figure out first what the consequences are to get out of your rental. The whole point of renting is that it's more flexible than owning, so it's asinine if you can't just move if you really need to (whether in w. your mom or some other situation).
As for the call center job, well, they probably have high turnover which means they don't expect you to stay forever. Sometimes just having a job is better than having no job, though you will have to decide for yourself whether it's worth it. Best of luck.
I just learned something that might affect your situation. I had assumed that because I have assets in an IRA that I would not be eligible for food stamps. And indeed the website says that people with more than $2000 in assets are usually not eligible. I applied anyway and I got them! That will save me a lot of money and make my IRA last much longer. Also, anyone eligible for food stamps is eligible for Assurance wireless free cell service. That will save me some too.
Do you have any money in a Roth IRA? I believe you can remove the principal you put in without penalties, so check on that. Also, there may be provisions for hardships even with other retirement funds, so a call to the company that manages yours would be a first step that's free. You may also be able to contact the IRS for more information that would at least provide the best way to do it to minimize fees/penalties/etc. Depending on how close you are to retirement age and how much you have saved, you could potentially come up with a strategy to try to sort of retire right now in a way. Your income may be severely curtailed for the rest of your life, but that may be worth it to you. Some people on this forum were living on very little and doing OK, and obviously there's lots of help at hand here and elsewhere on the net. Just some more thoughts I had while re-reading your post.
thank you--we are getting food stamps, actually.
I just learned something that might affect your situation. I had assumed that because I have assets in an IRA that I would not be eligible for food stamps. And indeed the website says that people with more than $2000 in assets are usually not eligible. I applied anyway and I got them! That will save me a lot of money and make my IRA last much longer. Also, anyone eligible for food stamps is eligible for Assurance wireless free cell service. That will save me some too.
Nope, it's a 403(b) (kind of like a 401(k) but I worked for a non-profit so that is the kind of plan we had). I'm only 47 so I don't think I'm close enough to retirement to be able to do much. I will definitely give the company a call, though, and a childhood friend is an accountant who will certainly be able to advise me. I'm just holding off as long as I can! Thanks for your suggestions.
Do you have any money in a Roth IRA? I believe you can remove the principal you put in without penalties, so check on that. Also, there may be provisions for hardships even with other retirement funds, so a call to the company that manages yours would be a first step that's free. You may also be able to contact the IRS for more information that would at least provide the best way to do it to minimize fees/penalties/etc. Depending on how close you are to retirement age and how much you have saved, you could potentially come up with a strategy to try to sort of retire right now in a way. Your income may be severely curtailed for the rest of your life, but that may be worth it to you. Some people on this forum were living on very little and doing OK, and obviously there's lots of help at hand here and elsewhere on the net. Just some more thoughts I had while re-reading your post.
I'm so sorry you're having to go through this. I would say if you need the retirement money now, you need it now. You'll take the 10 percent penalty hit and pay regular income taxes on it, but if you need it, you need it.
I had to to this several times and beat myself up about it every time. Silly in hindsight. I did only take what I absolutely needed to live on, never more than $10,000 a year.
And guess what? Now I am dying. The retirement money is long gone (gone to medical bills mostly). I am happy I took the money out and was able to use it.
In fact, if I have any regrets it would be that I scrimped and saved so much to build up that retirement account, so much sacrificing of the present for some mythical future. In hindsight, I would have gone out for sushi a lot more (!)
I hope things get better for you. Take the money out. Let it go. Then go outside and breathe. It's beautiful out there. And that part is free.
Oh my dear...what can I say? Tears are in my eyes. You are kind enough to tell me you're sorry for what I am going through, while you are getting ready to depart this earth. Blessings to you...
Thank you for your up-front honesty and advice. And good wishes. I wish only the best for you. I hope you are not in pain or suffering.
*hugs*
I'm so sorry you're having to go through this. I would say if you need the retirement money now, you need it now. You'll take the 10 percent penalty hit and pay regular income taxes on it, but if you need it, you need it.
I had to to this several times and beat myself up about it every time. Silly in hindsight. I did only take what I absolutely needed to live on, never more than $10,000 a year.
And guess what? Now I am dying. The retirement money is long gone (gone to medical bills mostly). I am happy I took the money out and was able to use it.
In fact, if I have any regrets it would be that I scrimped and saved so much to build up that retirement account, so much sacrificing of the present for some mythical future. In hindsight, I would have gone out for sushi a lot more (!)
I hope things get better for you. Take the money out. Let it go. Then go outside and breathe. It's beautiful out there. And that part is free.
After we divorced, 2XDH drew out all of his 401k and spent it on a couple of years of wine, women and song (really sex, drugs and rock'n'roll). At the time I thought it was pretty dumb. A few years later when he had a fatal heart attack at age 43, suddenly it seemed a lot smarter. I'm drawing on my IRA at 56, sometimes thinking I'll regret it when I'm 70 with no resources. Other times I think I'm just as likely to be glad I spent it while I could.
I'm sorry, but this made me smile. :|( I guess, as Neil Young said, in this case it was better to burn out than to fade away.
I had a really good friend in high school whose mother died of a heart attack at 42. My uncle had a fatal stroke at 46. My BIL died in a nursing home at age 42 (multiple strokes). I guess you never know...
After we divorced, 2XDH drew out all of his 401k and spent it on a couple of years of wine, women and song (really sex, drugs and rock'n'roll). At the time I thought it was pretty dumb. A few years later when he had a fatal heart attack at age 43, suddenly it seemed a lot smarter. I'm drawing on my IRA at 56, sometimes thinking I'll regret it when I'm 70 with no resources. Other times I think I'm just as likely to be glad I spent it while I could.
Well, you do have a point. There are only 3 or 4 agencies around here. One of them sent me to a "professional recruiter" who works for a subsidiary. She told me that my skills are obviously beyond those of a call center. I e-mailed him my resume and he hasn't even acknowledged it, though I followed up. I also e-mailed the resume to a placement agency that's been around for many years. I haven't heard from her either. IMHO there is no excuse for this kind of rudeness.
I guess it's back to the ol' drawing board.
I am wondering if you are with the right type of "temp" agency or are unnecessairly limiting yourself by asking for the wrong type of work.
My employer gets everything from $10 an hour "clerk" type people to probably $75 an hour technical types from "temp" agencies, so I know there are at least some that can place a larger variety of skill sets.
I wanted to add that if you do decide to go back to school and retrain for some other kind of job and you take money out of your retirement account, you will not have to pay the 10 percent penalty as long as that money is used for education expenses, which includes tuition, books, fees and living expenses. So you could take out money and if it is under the taxable amount for a single person you would pay neither the penalty or income tax as long as you were in school.
Take care!
WJSimon: Just saw your reply now. I'm considering that option. Not quite sure what I would retrain for...there are a couple of directions I could go in. Thank you again.
I hope you are doing OK.
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