Overhaulin'

I am 65 and have $25k in my 401k - I want to buy a new car - would it be a good idea to use the 401k?

I do have other investments that are already providing income, plus I am collecting social security and working part time. This 401k is invested in a very conservative fund and is not making more than 1%.

Public Comments

1. If you are planning to die soon, yes. Otherwise you'll want to have some money coming in down the road and you'll have to pay the IRS upon cashing out that plan so your $25K will be less. Further you will pay state taxes. Further you will lose the interest on that money. Why not take yearly distributions to make payments on a car loan IF you are making more $$$ in interest from the 401K plan than you would pay in interest on a loan. A car is a depreciation not an asset. Also consider a used car (1-2 years) still under warranty when you do buy the car. Live within your means. That $25K could turn to $30k or $50K before your last breath. You are not OLD, you are older.
2. If that's all you have, you shouldn't buy a car.
3. You don't speak of other retirement assets or income. $25,000 is woefully inadequate to retire on. If you don't have other substantial assets or income, you should protect that 401k.
4. Never touch any investments unless it's a last resort. If you have a clear mortgage, perhaps you can take out a home equity loan against your property which should be tax deductible or check with your accountant.
5. If you have other investments then this 401k is no different than a savings account; especially since you're invested in a conservative account (though I doubt it's only earning 1% - 1% over inflation maybe). You're going to take it from one savings account or another; makes no difference which. If you think you have enough to cover the loss of income then go ahead....The 25k would likely pay you about $85/month for your entire life. If you can miss out on that...better to take the withdrawal then have a few hundred dollar a month car payment.