IRA: Spend It or Save It?

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IRA: Spend It or Save It?

Compare cashing out your IRA today (minus taxes and penalties) with leaving it invested for future growth.

Inputs

IRA balance ($)

Your age

Marginal tax rate (%)

Expected annual return if retained (%)

Years to grow if retained

Results

Net if cashed out today

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Net if retained & grown (after future tax)

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10% early withdrawal penalty

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Federal tax on withdrawal

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Opportunity cost of spending

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If you are under age 59.5, IRA withdrawals incur a 10% early-withdrawal penalty plus ordinary income tax. Exceptions: first-time home purchase, higher education, medical, disability, etc.