My wife and I are turning 50. We have $800K in our 401(k)s and IRAs. Should we withdraw $100K to buy our dream home for retirement? The Moneyist replies: 'Your retirement accounts are making money for you while you sleep.'
Dear Quentin, My wife and I are months from turning 50 and have $800,000 combined in our 401s and IRAs saved for retirement thus far. We recently capitalized on an opportunity to buy our dream property where our final retirement home will eventually be built in 5-10 years, almost draining our other savings for the down payment.
You are under no such pressure. You want to build your dream home, and you have obviously set your heart on this decision, but making financial decisions for emotional reasons, especially fear, is more often than not a no-no. You write that you have “recently capitalized” on this opportunity. I assume you have not made any irreversible decisions yet.
— The Moneyist You don’t say whether you have a traditional IRA or a Roth IRA. With a Roth IRA you contribute after-tax dollars. A traditional IRA is funded with pretax dollars, and you pay tax on your withdrawals in retirement. For this reason, Roth IRAs are good options for younger people because investors in their 20s and 30s tend to have a lower tax bracket.
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