Here's why taking money out of your retirement accounts to pay down student loans is a bad idea, according to financial advisers.
Sen. Rand Paul says taking money out of your retirement accounts to pay down student loans will create a ‘more secure retirement’ — but many financial advisers strongly disagree.
Individuals would be allowed to take up to $5,250 out of their retirement accounts penalty- and tax-free, as could their parents to help with these college expenses.Paying off student loans under my plan, the HELPER Act, saves money AND helps provide for a more secure retirement. Check out this example to see how. pic.twitter.com/MBSYj7UdEY
In Paul’s example, the employee was either putting $230 a month toward student loans, to pay off the total balance in 15 years, without saving for retirement, or paying $437.50 toward student loans, then starting to save for retirement six years and nine months later. But this scenario, which factors in a 6% employer match, assumes a more generous company contribution than is common. Comparatively, the average match is 4.2% and it could come with strings attached.
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