I have been purposefully avoiding any political rants until now, but I would like to think of this one as a public service announcement. Obama recently released his economic plan that included the possibility of taking $10,000 penalty free out of your 401k. On the surface this sounds great. When you really stop and take a look at it, this is a really bad idea. Here are my reasons:
- The majority of the people that need help ie. the ones who were duped into getting a house they can't afford won't have 10K in a 401K much less a 401K to draw from.
- This will give the opportunity for a lot of people to be tempted into doing something really stupid with their financial future.
If people who really needed it were the only ones to take the money out it wouldn't be that big of a problem, but that assumes people are good with money and that is why we are in this situation to begin with. If people take money out of their 401K now, even without a penalty they are really taking out much, much more. We will end up with a bunch of people that will retire and have no social security or 401K to rely on. They will all be crying for the government to come and bail them out and once again it will be the responsible people that end up paying for the morons that didn't manage their money well.