Cash in retirement and invest?

Question

I am 34, and if I wait until I'm 55 I will have about $26,000 in my Cal Strs retirement account to be distributed at around $300 per month. If I withdraw it now, I'll get roughly $17,000 after penalties.

I plan to have an acupuncture practice in 4-5 years. Currently I have many school loans (so far around $60,000) rackin up interest, and I can barely make rent. I have a couple thousand in the bank (includes my $1000 CD) and it often drops down to nothing when I have unexpected expenses.

While I'm a full-time masters student and working as a substitute teacher, I barely keep my head above water. I want to secure my future -but I don't imaginge that Cal Strs money will help me much in the future. It could sure help alot now.

Should I cash it in, stabilize my current finances, and hope my practice will enable me to live comfortably into my late sixties?

Answer 1

Do do it!

it is very easy for me to say that because if it doesn't work out for you, i am not affected at all. but instead of being optimistic that you will be fine, be a realist and realize that you can never know what truly will happen.

so, my suggestion is to take a chunk out, not the whole amount, to cope with your problems now but be able to sleep at night. that way you can cover your rent, get your school loans down and overall fell a bit better with your current situation.

remember, hindsight is always 20/20 so go with your gut feeling. you could keep it all in retirement and then die tomorrow or you could receive 1 million dollars from a distant relative. you just never know.

good luck.

Answer 2

You can't predict the future. If you only focus on the issues that you have today, then you stand to have a better future.

Your student loan is, as you said, racking up interest. Take the $17,000 and pay all this to the loan. In the meantime, you will have to get either a higher paying job, or an extra job. You will also have to cut down some more on your expenses. Have you considered moving back in with your parents?

After you have paid off that loan can you consider saving for your future.

Answer 3

DON'T DO IT!!!!!!!!!!!!!!

My wife was in a similar situation and cashed out.  The future is hard to predict.  Surprise! Years later, she went back to teaching.  In order to get those years back, she would have to pay back the money plus a huge penalty interest payment.

Second consideration, which may be more important.  If you are expecting a monthly payment, I assume you are vested.  The big deal about officially retiring is not the monthly payment.  It is the retiree insurance plan.  Around here a private insurance plan to cover yourself and maybe a spouse at the same level as the retirees get would be unaffordable for most people.

I know a splinter hurts, but it's not worth chopping your foot off to eliminate.  That's what you're describing.  (We're in our 50s now.  It comes sooner than you think.)