You never know when a financial emergency might strike. Your car might break down. Your roof might spring a leak. And then there’s the possibility of losing your job and having your income disappear overnight. If you’re in a financial crunch, you may be tempted to tap your 401(k) for the cash you need. The question is: Is that a smart move?
Don’t confuse your retirement savings and emergency savings
It’s understandable that you’d want to raid your 401(k) in a pinch. But if you have an emergency fund, that’s where the money to cover unforeseen expenses should come from — not your retirement savings.