During times of high financial stress, the idea of taking a loan out of your retirement savings fund can sound like the perfect solution. After all, it’s your money, right?

Who wouldn’t consider taking advantage of money that you already have set aside for the future, isn’t that what it’s for?

It’s clearly the quickest option. Sometimes it offers a better, lower-interest rate than other loan options you’re looking at. It doesn’t require a credit check, and you can always pay the loan back during the designated repayment period to avoid any tax penalties.

On the surface, it sounds like the perfect option for when you find yourself in a pinch. But as with anything that sounds too good to be true, there’s always a catch.

Such is life, right?

We’ve decided to break it down by first focusing on why you’re considering taking out the loan to begin with, and helping you better determine whether sacrificing your retirement fund is truly the best option here.

Common reasons you might be considering it:

While these are all valid enough reasons, the hard truth is that “nearly one-third of baby boomers had no money saved in retirement plans as of 2014, when they were on average 58 years old”.

For those that think this might be just be a “generational thing”, they’ll be surprised to hear that “95% of millennials aren’t saving enough for retirement, as well.

Meaning that, by taking what you think is actually the least harmful and financially smart route now, your future self might be the one paying for the cost of your missed retirement savings.

So, now what? As with any other question concerning your retirement plan, every individual and their financial situation is unique and should be treated as so. But more often than not, we would advise looking at all other options before deciding to take a loan out of your 401k, and here’s why:

We recognize and understand that planning for the future can be stressful. With all of the information out there it can be tempting to take the easiest, and quickest solution when you’re in a financial bind.

Given all the factors that come into play when deciding what type of loan is best for you financially, we understand that there aren’t always better alternatives.

However, we wouldn’t be able to call ourselves retirement planning experts if we didn’t ask you to at least review all other options, before deciding to take out a loan on your 401k. If it turns out that this is the best possible option, then we’re here to help you navigate a successful plan moving forward. Part of which, should always include an emergency savings fund to avoid having to make a decision like this in the future.