Americans are withdrawing their 401k money early - experts are calling it "a flood"

[Algernon Moncrieff]

13. I'm 49, and I figure to be working until I'm 75

I moved my 401K money out of equities and into bonds back in Spring. So far, it's been about a wash. I still am looking for a downward correction. When the market does correct, I may withdraw all my 401 K money, and reinvest it into a Roth 401 K. I'll lose about a third of what I've got, but what I end up making on the investments over the next 25 years, I'll get tax free.

The people I've seen take the worst beatings in the market on retirement accounts had one of two bad things happen. In some cases, I saw people whose 401K was wholly or principally in company stock. While employee stock plans can be a nice benefit, you never want all the eggs in one basket; if your company tanks, there goes the retirement fund. I also saw people who had big nest eggs; were close to retirement; and then kept their money in inappropriate funds too long, instead of reallocating to safer investments.