Is buying land a good idea? It's another Ask GFC episode talking about everything from taxes to when's the best time to buy?
GFC Reader Ask:
I will be 59 soon and will be retiring and have about $300,000 in my 401k and would like to use that money to purchase property (just land) to pay it out right, and then just get a loan to build the home, which I will use my pension and my wife's income to pay the mortgage. What type of penalties would I have? And if not, what are some other options?
More from GFC, Below
The Reality of Cashing Out Your 401k
The big question, are there any penalties? Nope. You're in the clear on that… but what you do have to worry about is taxes and a lot of taxes. If you're planning on pulling out the full 300k in one year, your tax bill will not be a small one. Have you planned for that?
Beyond the taxes, what happens if you need additional funding for a medical emergency or you want to take a year long vacation? I'd advise my clients to avoid cashing out their entire 401k… because how bad can your living condition today be? It just doesn't make good financial “cents” to cash out fully as the means for providing housing at the start of your retirement.
If you’re a member of the Good Financial Cents community and have a question, make sure to email us. I would love to turn your reader question into a blog post or a video, so don't hesitate to reach out!