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Getting in on the housing market may seem like a sound financial goal. Using your retirement funds for a down payment might not be right for everyone, however, and may come with unexpected costs. Here’s how to weigh your options and make the best decision for your life now and in your retirement years.
Depending on the type of retirement account, you may incur a tax penalty if you use the money for a down payment. Look closely at the effects of using funds from a 401(k), IRA or RothIRA.
Whichever route you choose, it’s important to analyze it in the context of your entire financial picture — including how many years you have left until retirement.
It’s important to note that people are living longer and you may have potentially a few decades of living after you stop work. Before taking cash out of your retirement account, it’s a good idea to sit down with a financial advisor and weigh the potential asset of the house versus its costs (property taxes, maintenance fees, utilities). You should have a sense of your overall retirement picture, including income from savings, investments, pensions and social security before making a large withdrawal.
Whatever you choose, the various investment vehicles give you options! You can make the move that’s best for you and for your family.