Marco Rubio's approach to personal finance could make some retirement advisors cringe.
The Florida senator and Republican presidential candidate has cashed out retirement savings early, sold a home at a loss, and had significant student debt.
“The Rubios are no different than a lot of American families,’’ said Timothy Steffen, director of financial planning at Robert W. Baird & Co. in Milwaukee. “They have shown over and over again the perils of living beyond your means.’’
Rubio, 44, liquidated a $68,000 retirement account, according to reports in the Associated Press and New York Times. Financial planners usually tell clients to tap into 401(k)s or individual retirement accounts only as a last resort. That’s because of the tax-free growth they offer during working years and the hefty penalty usually charged for withdrawals before age 59 and a half.
The reality is, 401(k)s and IRAs have become the go-to emergency savings accounts for many Americans since the financial crisis. In 2011, 5.7 million tax returns, or about 4 percent of all U.S. households, reported paying penalties on early withdrawals from retirement accounts, according to Internal Revenue Service data. The IRS collected $5.7 billion that year from penalties, meaning that Americans took out about $57 billion from retirement funds before they were supposed to.
Another group of Americans are tapping their 401(k)s through loans when they need to buy a home or endure another type of financial pinch. About 22 percent of Americans had loans outstanding from their 401(k)s as of March 31, according to Fidelity Investments, the largest provider of the plans.
The national picture for student-loan debt is even worse. Only 37 percent of borrowers are current on their loans and actively paying them down, according to a report by the Federal Reserve Bank of New York in April. About 17 percent are in default or delinquency and the bills continue to mount because of the ever-rising cost of college and graduate school. Rubio has paid off $150,000 in student loans, his campaign said yesterday in a statement.
Marco Rubio's Retirement Account Moves Are A Definite No-No, Advisor Says
June 17, 2015
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Comments
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My dear Capstone, Seattle Reader touched a nerve, eh? Stop trying to defend the indefensible Pervert in Chief and his Married for Convenience wife.
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Dear Seattle Reader, As a progressive and not particularly a fan of the Clintons, please don't just make up stuff. Implying that 90% of the Clinton Foundation money "is used to fund the Clinton's huge lifestyle" is......your fantasy and not remotely a fact. Take a look at the Annual Report, their Form 990, anything you please. There money is used mostly in house to carry out their programs. The administrative and fundraising costs are in line with similar organizations and you....get your world view through the "big bloviator", Rush L.
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FA, why are you piling on Rubio ? Have you run any other articles on politicians holdings or tax cheating ? What about Charlie Rankle or the Clinton 1000.00 investment turned in to over a 100,000.00. If your going to get in to politics you better make it fair and air out the dirty laundry on both sides. If you don't then your no different then MSNBC and have no credibility.
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paying off students loans is commendable. why not run some articles about the clintons bogus $2 billion foundation whereby all three multimillionaire clintons shake down donations for favors , mostly preferential treatment by the media, think stephanopolis, and all of the international wheelings clinton did as sec of state with foreign ntaionals...pay to play dealings...and oh yes, the fact that $1 out of $10 actually funds charitable causes while the remainder is used to fund the clintons huge liefstyle of the now one percenters. chelsea lives in a $15 million dollar nyc apt with her hedge fund husband. snagged a high paying wall street job with no experience, has her own talk show yet has done nothing to warrant her status . FA stay out of politics and just report both sides.