Personal Finance

I'm 32 with $100k saved for retirement and wondering if I should withdrawal some to help my aging parents who have nothing

Marc Guberti

Published: February 8, 2025 7:14 am

A 32-year-old Redditor is married and has four kids, but the Redditor also has two aging parents who need financial support. It’s a tough situation, and the Redditor is considering pulling out of a 401(k) plan with $100,000. The Redditor’s parents are 60 and 58, which makes them too young for Medicare, and the parents make about $30k per year.

The Redditor posted about it in the Personal Finance Reddit community and received plenty of comments. It’s always good to speak with a qualified financial advisor if you can, but the commenters offered some valuable advice worth considering.

Alternatives to a 401(k) Withdrawal

Most people in the comments were quick to discourage the Redditor from pulling out of the 401(k) and to look for alternatives instead. Using home equity, exploring Medicaid nursing home options if they can qualify for chronic illness, and having a real conversation with the parents about them going back to work were some of the suggestions.

A 401(k) withdrawal isn’t the right move due to high penalties plus immediate taxation. The Redditor is also $70k in debt between student loans and a car loan. That doesn’t include monthly mortgage payments.

Don’t Continue the Cycle

Although the Redditor is in a challenging spot, the last thing they should do is continue the cycle for their children. Pulling $100k from a 401(k) doesn’t only trigger penalty fees and taxes. You will also miss out on compounded growth. If the $100k portfolio gets an annualized 8% return, it will turn into $2.2 million after 40 years. 

Anyone who is thinking about pulling from their 401(k) should think about missing out on $2.2 million instead of $100k. Having less money by the time you retire will also put your children at a disadvantage, enabling the cycle to continue.

Finally, pulling funds from a 401(k) may just be the starting point. What if other big expenses like medical bills show up? The Redditor shouldn’t be expected to foot the bill for these types of expenses, but quickly pulling from a 401(k) can create a cycle of caring for elderly parents at the expense of their current family.

Get Your Finances in Order First

One commenter brought up the oxygen mask analogy when providing some advice. Basically, the idea goes that you have to put on your own oxygen mask before you can help someone else with their oxygen mask.

The Redditor is still a long way from having a large enough nest egg to retire. Furthermore, additional expenses can come up. One commenter mentioned that each of the Redditor’s four children will eventually need braces. 

Expanding your portfolio first and reaching significant milestones will give you more flexibility. It’s important to remember that the Redditor’s parents are both relatively young — 58 and 60, respectively. They may live for another 10-20 years and further pull at your financial resources.

Setting boundaries so you can build your nest egg will put you in the best financial position. You can still support your parents, but it shouldn’t require drastic measures like depleting a 401(k) account and putting your own financial goals on hold indefinitely.