In this episode of Financial Advisors Say The Darndest Things, host A.B. Ridgeway tackles the alarming trend of Americans prematurely cashing out their 401k accounts. With rising inflation, medical emergencies, and job changes driving these decisions, A.B. discusses the dangers and long-term consequences. He also shares some practical tips on rolling over your retirement savings and emphasizes the importance of consulting your "Power 5" before making critical financial moves.

Key Takeaways:

1. Cashing Out Comes with Penalties – Withdrawing funds from your 401k before retirement can lead to significant tax penalties and long-term financial setbacks.
2. Consider a 401k Rollover – If you leave a job, it’s often better to roll your 401k into a new employer’s plan or an IRA rather than cashing out.
3. Consult Your Financial Team – Always consult with your financial advisor, accountant, and other key figures in your "Power 5" before making major financial decisions.

Quotes:

1. "Cashing out should be the absolute last resort in the most extreme circumstances."
2. "Even though you have a little bit of ease up front, on the back end it’s going to be even more difficult."
3. "We need to understand what we are doing before we make those financial decisions."

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*Disclaimer: This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.