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The Biggest Retirement Mistake You'll Ever Make

Investors make plenty of mistakes with their savings. But some mistakes are more important than others. The biggest one of all can make a huge difference to your retirement.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the one retirement mistake that can have the biggest impact on your retirement: cashing out your 401(k) plan account. Dan notes that millions of people do this when they leave jobs, paying tax and 10% penalties on the money they receive. But as Dan notes, the even bigger impact comes from not having that money growing for you to help support you in retirement. Dan concludes that for most people, rolling over old 401(k) plan accounts is a much smarter move than just taking the money and running.

Don't be scared to invest
The reason why so many workers cash in their 401(k)s is that they're too scared to invest and put their money at further risk. Yet that's almost always the wrong move. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (6) | Recommend This Article (24)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 01, 2014, at 9:38 PM, pissedamerican wrote:

    Do people even make enough to save any more?

  • Report this Comment On February 02, 2014, at 12:32 PM, Katsdad wrote:

    I suspect that following the advice of lots of these articles by waiting too late to retire and then dying before you get to collect anything might possibly be worse.............

  • Report this Comment On February 02, 2014, at 12:56 PM, syzygysyzygy wrote:

    always grab the $$$ and run as soon as you can ------- you cant trust immoral corporations or highly immoral US govt

  • Report this Comment On February 02, 2014, at 2:33 PM, Artie wrote:

    syzygysyzygy - You are fooling yourself if you think the immoral government can't get at your money just because you've cashed out - just ask the bank depositors of Cyprus about that! You can leave your money in the market and make money off of it, or you can cash out and lose money every year - your choice - but the gov't can get it if they want to, regardless of where you put it.

  • Report this Comment On February 02, 2014, at 3:35 PM, NotarySojac wrote:

    When you've lost your job and you're just plain out of money and still need things like shelter and food, you don't have the luxury of establishing a retirement investment strategy - you have to pay the rent now.

    And even if you don't need to dip into your 401(K) to pay the bills, you might be paying so much in fees and making so little in earnings that you're just watching it shrink from month to month. At some point, you're going to decide to pull it out and pay the penalty and taxes just so you don't watch it all wither away.

    This article makes about as much sense as McDonalds advising their employees on how much of a tip to give their massage therapists and personal fitness trainers.

  • Report this Comment On February 02, 2014, at 3:48 PM, jtminpa wrote:

    The American dream is gone like it or not. So cash in and enjoy what little you may have.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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