401K advice please

[hrdtail]

My wife and I are looking to purchase a small travel trailer to use as a summer vacation home. We both have great jobs, mine in particular will give me at least a 90% retirement in about 15 years when I plan to retire. I have approximately $90,000 in a deferred comp account that I add $1200.00 a month to, and my wife has approx. $17,000 in hers. We were thinking of cashing out hers and paying for the trailer outright, instead of financing it.

is this a bad idea, or should we just go for it and continue our "live life now" attitude. Thanks in advance, any advice is appreciated!

[jIM_Ohio]

bad idea

[hrdtail]

Thanks for the response

[disneysteve]

I probably agree with Jim. What is a deferred comp account and are there tax and penalty consequences of cashing it out? If so, then definitely don't touch it. Also, how secure is your pension? I wouldn't be hanging my retirement "hat" on a pension that is promised to be paid 15 years from now unless I was a federal employee. That's probably about the only pension that you can be reasonably sure won't disappear.

[hrdtail]

I'm a law enforcement officer in a very financially secure city (knock on wood) so I'm pretty confident my retirement will be ok. The money we were considering cashing out was my wifes little next egg of about $17,000.

[Seeker]

I probably agree with Jim. What is a deferred comp account and are there tax and penalty consequences of cashing it out? If so, then definitely don't touch it. Also, how secure is your pension? I wouldn't be hanging my retirement "hat" on a pension that is promised to be paid 15 years from now unless I was a federal employee. That's probably about the only pension that you can be reasonably sure won't disappear.

Yes, a Deferred Comp Account is usually a City, State or Gov't 457 plan.

There are always penalties associated with cashing out of any retirement plan. Probably also the wife's ...

OP probably should look at other ways of financing for summer vacations and mobility.

It might also be an alternative to "rent" a mobile home and see it's more viable since you may only be using it in the summer months? I wouldn't buy to use a max of three months a year.

[disneysteve]

Yes, a Deferred Comp Account is usually a City, State or Gov't 457 plan.

There are always penalties associated with cashing out of any retirement plan. Probably also the wife's ...

In that case, definitely NO. You'll probably pay some type of penalty, like 10%, plus taxes on the money, another 25%.

Don't cash in your future to pay for present luxuries.

[Snave]

If your wife could earn 9-10% on that 17K, it would be 65-68K in 15 more years. My guess is that if you cash it out, you will never save enough to make that up.

[Scanner]

Word of advice on toys with motors:

(motor homes, motorcycles, boats)

Rent.

Don't buy.

Rent all you want.

They are money pits.

Rent until you get sick of the thing.

You want a boat, for instance? Go out and rent one. And everyday go out and sit on the thing for 8 hours and stare at the water.

Guarantee after 2 weeks, you'll be sick of it and guess what? You can hand it back in and you don't pay another dime over the rent.

[Keen]

Save up and buy a used travel trailer...that's what we are doing!

[Tree0164]

No don't cash in your wife retirement. I would save up over the next 2-3 years for the travel trailer

I am not sure what the def comp will payout but it sounds like you do not have enough saved for retirement right now.

[Squeezing Pennies]

Look on "craigslist" in your city for a used travel trailer. There are some AWESOME deals to be found on there!


Save up for it and pay cash.