In an announcement, the NCPA said its 401(k) calculator can help determine how much a loan will cost in terms of lost savings and investment opportunities. NCPA recommends participants access the calculator in order to:
- Make annual comparisons of projected 401(k) balances, with and without a loan, from the year the money is borrowed until the year of retirement, and
- Compare monthly income at the time of retirement, with and without a loan, based on a 30-year fixed annuity.
An NCPA analysis revealed that a 35-year-old worker who borrows $30,000 over a five-year period, could end up with $192,794 less in savings at retirement (age 67) than if he had not borrowed.
“People don’t realize how much retirement money they’re giving up by raiding their 401(k) accounts,” said Pam Villarreal, NCPA Senior Policy Analyst, in the announcement. “Even in extreme situations, it’s best for people to seek other sources of capital before tapping into their 401(k) accounts.”
The calculator can be accessed at http://www.ncpa.org/401kcalculator/d401kwa2.php .