Hi everyone - Looking for advice. Long time reader, first time poster :)
29 years old, single, gainfully employed with a stable job, currently debt free (aside from car lease payments), 50K or so of cash and liquid investments, have roughly 115K in my 401K and am contemplating withdrawing everything from the 401K and converting it to silver and gold bullion.
I know that "conventional" wisdom states to NEVER withdraw money early from a 401K as the penalties are substantial and create additional tax liability, but I am actually contemplating it if I change employers as I've been offered a new job with a competitor.
My 401K is not very diversified as I am invested in a blend of small cap, mid cap, and large growth funds along with some bond funds. Thinking about what happens to 401K in the future, I'm not sure I want to leave this kind of money in the hands of a bank/financial institution given what I believe will happen in the future.
If I withdrew, I would be bumped up into the 33% tax bracket for 2011 and that means after 10% penalty ($11,500) and 33% tax ($34,155). I would pocket $69,345 which would be used to go 70/30 towards gold/silver respectively since I would have roughly 1.9lbs of gold and 32lbs of silver if I allocated every dime of the 401K money to bullion. I'm a big strong guy that could carry an 80 lb pack in case of emergencies, so I've determined roughly 45% of my capacity would be well served for bullion (35 lbs).
Now, in order for this investment to make sense financially, my targets of $2500 per oz of gold and $70 silver would need to be reached. These prices seem entirely reasonable from my perspective and rather low in the grand scheme of things given where the US is headed.
The taxes and fees I'd pay now are the premium for freedom and mobility in the case of calamity. I am not a soothsayer, but I can't imagine banks will allow 401K withdrawals or loans in the future if all the chickens come to roost.
Am I crazy for thinking about doing this? I want to have complete control over my life and mobility, and a bunch of fake dollars in a 401K that can't be touched for 40 years seems very foolish if those dollars are worthless. Will the money be there in a decade? 2 decades? 3 decades when I'm set to "retire"?
Worrying about a bunch of money tied up in a 401K that I'm not going to touch for 30 years isn't something I want to do in the face of hyperinflation. Yes, I lose out on "tax savings" and the growth of the account, but I don't want to chase gold and silver by waiting to accumulate slowly.
Thoughts / advice / harsh words are welcome and appreciated.