Life can bring huge expenses, planned and unplanned. Many look to their retirement accounts as a handy lifesaver to get out of an unexpected, tough financial spot — but they do so at an enormous cost.
A 2015 research study conducted by Boston Research Technologies in collaboration with Retirement Clearinghouse found that 34 percent of millennials, 34 percent of Gen Xers and 24 percent of baby boomers have cashed out at least one retirement account during their careers and that "a majority of retirement-plan cash-outs are unnecessary — a product of convenience rather than need."
CNBC.com asked advisors about some of the worst mistakes they've seen for cashing out individual retirement accounts and 401(k) plans.
Job-change cash-out. "Many millennials have a tendency to cash in their 401(k) when they change jobs," said Chris Chen, certified financial planner and wealth strategist with Insight Financial Strategists. He recalled the situation of a young man who cashed out his $50,000-plus retirement account to use, in part, on a vacation and expenses.