Considering Big 401K Withdrawal

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Topic Author
PH12
Posts: 32
Joined: Tue Jun 17, 2014 7:20 pm
Location: MA

Considering Big 401K Withdrawal

Post by PH12 »

Hi All. Looking for a second opinion for home purchase in the near future. Splitting from partner and need place of my own. I’m considering withdrawing $100,000 from my Roth 401K but I’m not sure if will regret later. I have $300,000 cash for the home purchase but not enough in this area. My question is will I have enough to retire if I use the $100K or would this me a dumb move? A $400K house will be a shack here. I ran the numbers on FIRECALC and it looks like I’ll be okay. Thanks for reading this!

57 yrs old, retired, single, no kids.
Won’t be needing to tap into retirement savings for another 3 years. Living off severance pay and pension till I'm 60yrs. This is not enough for a mortgage.
health/dental insurance paid by former employer till medicare.
no debt
think $50K pretax would be enough to live on without a mortgage.

About $1.1M in retirement savings. 50 stock/50 fixed income

Current retirement assets

Pension

$1,570mo before taxes, not COLA adjusted

401k
SP 500 Index……………..…$288K
Passive International……..$115K
Small Cap……………………$5K
Verizon Stock………………$27K
Pimco Core Bond TFLE…..$24K

$95K of this is Roth 401K contributions


Roth IRA at Vanguard

VEMAX Emerging Markets……$2.6K
VIMAX Mid Cap………………..$70K
VSMAX Small Cap……………..$27K
VBTLX Total Bond………………$62K

Rollover IRA at Vanguard

VEMAX Emerging Markets…$10K
VBTLX Total Bond…………….$193K
VTABXTotal Internat Bond….$42K
VTIAX Total Internat Stock ..$27K

Rollover IRA in CDs

$219K at @ about 2%, all CDs expire within a year


Cash for Home purchase

$300,000

Emergency

$16K HYS

Social Security

$3K a month, plan to take it at 70 yrs old
sd323232
Posts: 641
Joined: Thu Jun 21, 2018 4:45 pm

Re: Considering Big 401K Withdrawal

Post by sd323232 »

100k is not not that much considering your situation, also in this case i see it as you move from your roth investment, into your real estate invesment. Who knows, may be your house will appreciate higher than stock market and you will actually come ahead here. I would say do it.
bloom2708
Posts: 8171
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Considering Big 401K Withdrawal

Post by bloom2708 »

I would rent for 1 year.

Doesn't sound like a good time to make big decisions and an expensive house/big mortgage might not be a great idea if you are retired/close to being retired.

Let things simmer and maybe some different clarity will come.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
Olemiss540
Posts: 1497
Joined: Fri Aug 18, 2017 8:46 pm

Re: Considering Big 401K Withdrawal

Post by Olemiss540 »

Consider renting for the ling term or moving to a lower cost of living location? Why rush to purchase if you could rent for 20 years based on the 300k cash you have on hand?
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
helloeveryone
Posts: 589
Joined: Sun Sep 04, 2016 5:16 pm

Re: Considering Big 401K Withdrawal

Post by helloeveryone »

Olemiss540 wrote: Fri Jun 05, 2020 2:42 pm Consider renting for the ling term or moving to a lower cost of living location? Why rush to purchase if you could rent for 20 years based on the 300k cash you have on hand?
I second looking at the advantages/disadvantages of moving to LCOL area and also take your time and rent for 6 months to 1 year as you consider your choices
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Considering Big 401K Withdrawal

Post by cherijoh »

bloom2708 wrote: Fri Jun 05, 2020 2:26 pm I would rent for 1 year.

Doesn't sound like a good time to make big decisions and an expensive house/big mortgage might not be a great idea if you are retired/close to being retired.

Let things simmer and maybe some different clarity will come.
+1

What ties you to your HCOL area? I would also suggest finding someplace to rent while you figure it out.
palanzo
Posts: 1382
Joined: Thu Oct 10, 2019 4:28 pm

Re: Considering Big 401K Withdrawal

Post by palanzo »

cherijoh wrote: Fri Jun 05, 2020 2:50 pm
bloom2708 wrote: Fri Jun 05, 2020 2:26 pm I would rent for 1 year.

Doesn't sound like a good time to make big decisions and an expensive house/big mortgage might not be a great idea if you are retired/close to being retired.

Let things simmer and maybe some different clarity will come.
+1

What ties you to your HCOL area? I would also suggest finding someplace to rent while you figure it out.
+1 This is really good advice.
Topic Author
PH12
Posts: 32
Joined: Tue Jun 17, 2014 7:20 pm
Location: MA

Re: Considering Big 401K Withdrawal

Post by PH12 »

Thank you all for your kind words of wisdom. I think it is wise to wait a little before buying but on the other hand prices seem to go up every year so I've been a little panicky. I live in the LCOL area of a HCOL area (about 13 miles outside Boston). I'm open to moving, it would be a matter of finding the right place. Thank you again.
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