ROCKFORD (WREX) — 47 percent of people who took a loan or withdrew from their retirement plan, feel they withdrew more money than they needed. That's according to a survey by Voya Financial. So why is that happening? MainStreet Financial Group CEO Herbert F. Allen III told 13 News what he believes is the cause.
"When you're in the middle of a pandemic, you can do some strange things," said Allen, who is also a Senior Investment Officer with the group. "And people did. They took a whole lot of money out of their account. And they took it out of their retirement account, which was also an investment account. And I think that's the key."
Allen says there are two reasons why people took money out. That was to use it for emergencies and to prevent further financial loss. But many people don't know what their cash flow is. What Allen encourages people to do if they took out too much money is to return the money to their 401(k).
"Go and talk to your advisor," said Allen. Talk to somebody in your 401(k) plan and just say 'I want to get my money back into retirement savings.' It can happen. It can happen in over a three-year period."
Allen says you should know what your cash flow is before deciding how much you money you have in retirement and how much you have set aside.