Over the past several years, I have spoken to many people who have been forced to tap into their 401k or other retirement accounts. Some have done it to try and save homes (only to lose them anyhow), others have done it to survive after losing a job, and others have done it for seemingly legitimate reasons such as funding their child’s college education.
Although it seems to help in the short run, there are two serous problems with this strategy:
1. It robs you of your much needed retirement funds. Many people already fear outliving their retirement, and this only makes that problem worse.
2. It is very costly. Taking out retirement funds early from a 401k program usually incurs a penalty as well as creating a taxable event, so you end up losing anywhere from 25% – 40% of your money.
What if there was a way to use that money and recoup the losses from the taxes and penalty, still have it grow, AND have access to it after you have spent it?
There is! Through a process called infinite banking, you can transfer this money into a secure financial vehicle and by redirecting the flow of your money, you can rebuild this fund and recover any losses, PLUS continue to grow the funds for your retirement and use it again whenever you want without paying taxes or a penalty.