Posted By: towarnj @ 07/18/2008 8:01:41 PM
Comment: Comment: Thanks for your balanced approach - confirming the preference for loans over withdrawals. Some studies show that loans have almost no impact on retirement savings when the individual continues contributions and repays the loan. Even more studies show that if you restrict access, people will save less or not at all. We should be creating designs and policies that encourage people to save more than they think they can afford to earmark for retirement, offer access via loans, and make repayment easy. Remember, people had to first save before they qualify for a 401(k) loan. Save, borrow, repay to rebuild the account; repeat over and over until retirement. The goals here should be to encourage people to save more than they think they can afford to earmark for retirement, to design plans to favor 401(k) loans over 401(k) withdrawals, and to implement processes that facilitate loan repayment.
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