Why Tapping Your 401(k) Early Can Sting

For young adults with high-interest debt and few other options, tapping into retirement funds can be tempting. However, there's one major reason why it's a bad idea: It can cost a lot more than it saves.

While the golden years can seem far off to those in Generations X and Y -- and immediate needs can seem more important -- it's wise to look for other options. Withdrawals or loans from retirement funds can come with hefty penalties, taxes and interest rates unless there is a severe medical or court-ordered hardship. Taking out cash also saps the compounding interest that is being earned.

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