There's a good bit of debate about whether it's a good idea to take a loan from your retirement account. On one hand, it's not hard to appreciate that you might be more motivated to participate in your company's retirement plan if you know you'll be able to access your savings in the event of an unforeseen need.
On the other hand, people that do take a loan from their retirement plan account often fall behind on their long-term savings goal since most people don't - or can't - make contributions during the time they're making loan payments. That can mean years of missed opportunities to save.
And sometimes, unfortunately, people default on their retirement plan loans. When that happens, their long-term financial path suffers, too.
The use of participant loans points to another problem - namely that too many people don't have an emergency fund or savings outside of their retirement plan account. It's no wonder that too often they look to their retirement account in times of financial stress. Our goal is to help you create long-term savings success and to do that, it's especially important to think about things like budgeting, managing money and making choices about credit cards and loans because the better prepared you are to handle unexpected financial needs, the less likely you'll be to request a loan from your future - your retirement account.
Talk to us about how we can help you take steps to true financial wellness. The result may be the loan you never take. And that may make all the difference.