SOURCE: Take Charge America

November 19, 2008 18:04 ET

Cashing in Our Financial Future: Recent Take Charge America Poll Reveals Increased Interest to Prematurely Withdraw 401K and Retirement Savings

PHOENIX, AZ--(Marketwire - November 19, 2008) - Take Charge America, one of the nation's largest non-profit financial education, credit counseling and debt management organizations, is concerned that many Americans are forfeiting any opportunity to enjoy their future as they cash in 401Ks prematurely, retire early, or misunderstand the penalties associated with critical financial decisions.

A recent phone bank outreach event to nearly 300 concerned consumers, revealed that more than one third of the individuals polled would consider meeting current financial obligations through their 401K and retirement savings. In addition, according to a recent AARP study more than 10 percent of people ages 50-70 years old who had already retired are going back to work based on the economy.

"The age at which Americans can retire will continue to increase as many individuals look for quick fix solutions for current financial woes," warns Mike Sullivan, director of education for Take Charge America. "We want to help individuals find alternatives instead of creating additional financial problems by borrowing against their future."

At Take Charge America, certified credit counselors provide financial advice for individuals dealing with financial crisis. Individuals in need of help can contact TCA at 1-888-822-9193. Sullivan adds some advice to navigate retirement and 401K planning to alleviate financial concerns now and in the future:

Don't Consider Cashing Out a 401K Early -- This is almost always a bad idea because you are hit with large penalties and taxes. For example, if you're under 59 1/2 you are likely to have a 10 percent penalty in addition to owing taxes on the funds. The federal government requires that 20 percent of the amount payable is automatically withheld on the taxable portion of your withdrawal. Typically this means a total of 30 percent of your investment is paid in taxes and penalties.

Don't Retire, Hold on to Your Paycheck -- Postponing retirement can provide you with larger benefits. The government is looking at 67 as the new retirement age; you might want to think about 69 or 70. This may seem difficult, but the rewards will be worth it as you are able to afford and enjoy retirement when it finally does come.

Take Care of Your Health -- Staying healthy will help you avoid medical costs. It sounds simple, but keeping weight in check by eating less and avoiding fat and sweets can pay dividends in the future. Exercise regularly and vigorously, avoid alcohol and tobacco. Get medical and dental check ups regularly. This preventative maintenance can decrease the emotional and financial stress that excessive medical issues create.

Change Your Lifestyle -- It sounds drastic, but the best response to credit issues is to stop charging, put away your credit cards and get on a budget. A credit counseling firm or bankruptcy court will demand changes anyway, so get a head start and examine your spending habits. The quick fix is always good, but seldom works.

"It is tempting to look at our 401Ks as a resource to alleviate our current financial burdens," said Sullivan. "However, changes in lifestyle including spending habits, taking care of our health and eliminating excess expenditures can help secure financial independence now without jeopardizing our future."


Founded in 1987, Take Charge America is currently celebrating more than 20 years of service as one of the country's largest non-profit financial education and consumer debt service organizations. Through education, customized credit counseling and debt management, Take Charge America helps consumers achieve self-reliance, financial stability and financial freedom. Take Charge America is a member of the Association of Independent Consumer Credit Counseling Agencies, a national membership organization established to promote quality and consistent delivery of credit counseling services. In 2006, the organization received the Better Business Bureau Ethics Award in recognition of its business ethics and integrity in the marketplace. To learn more about the organization or its programs, please call 1-888-822-9193 or visit