My current contract is ending, with no future job immediately lined up. I have a few thousand dollars in my checking/savings accounts, and a significant amount of cash in my Roth IRA. I have no debt.

I don't want to take another job immediately, as I need to make a decision as to my future career.

I know that I won't pay any taxes on the contributions from my Roth if I take them out (only "earnings" are taxed). But I am not sure this is really the right thing to do, since I shouldn't be touching my retirement account, except in a dire emergency. Plus, I'll be losing those contributions forever since I don't think I can re-contribute (can I?).

Is it a good idea to take out money from the Roth for this, or should I go and find a different job to pay the bills while I figure out my next job?


Take another job. From a personal finance perspective this is the wrong reason to dip into a retirement account. You will lose so much ground towards actually retiring. Sure you won't be taxed, but you will be missing so much opportunity where that money won't be working for your retirement.

The off-topic answer to take to the start-ups stackexchange site is: don't quit your day job until your business plan is written out and you have an idea of where to get your startup capital.

  • I didn't just quit my day job to think about starting a a business, my current day job is 100% travel and I can make the same (or more) working back home without the loss of personal time. I'll likely do some contracting for a while while I work out my plan. – NPFinance Mar 30 '11 at 22:39
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    @ N West. I suppose I should have said "a job" because there are plenty of jobs you should quit. =) – MrChrister Mar 30 '11 at 23:25
  • +1 for taking another job, even if it's delivering pizzas or flipping burgers if the OP has to get out of his job right now. Otherwise I'd wait until a better opportunity comes along. – Timo Geusch Mar 31 '11 at 22:15

That's up to you, but I wouldn't play around with my retirement money if I was in your situation. Your earning potential during your retirement years will likely be at its nadir. Do you really want to risk being forced to be a Wal-Mart greeter when you are 80?

Also, considering your earning potential now is probably at or near the peak, your opportunity cost for each hour of your life is much higher now than it will be later. So ultimately you'd be working a little harder now or a lot harder later for less money.

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