What if I need some of the money that I’m investing for retirement?

There are ways to access your retirement savings plan before age 59 ½. Here are some of the possibilities:

• You can usually borrow from your 401(k).
• You can make a hardship withdrawal if certain conditions are met.

You can only borrow against retirement savings plans that permit loans. Even when loans are permitted, there are restrictions on how much you can borrow. Borrowing against your 401(k) has drawbacks such as:

• Your account grows more slowly because of the loan.
• If you fail to repay the loan, you have far less money saved and invested for retirement.
• If you fail to repay the loan, it is treated as income and you owe taxes on the amount owed. You may also be subject to a 10 percent penalty on the amount that wasn’t repaid.

If you invest in an IRA, you can make qualified withdrawals in certain circumstances such as:

• To buy your first home
• To pay for college expenses
• To pay for certain medical bills
• To buy health insurance if certain conditions are met

You can also make qualified withdrawals if you become disabled.

When you invest in a Roth IRA, you are permitted to withdraw your own deposits at any time. For example, if you’ve contributed $12,000 to a Roth IRA that is now worth $20,000, you can withdraw your contributions but not the earnings.

What investment options are available in 401(k) retirement savings plans?

There are many investment vehicles to choose from when investing for retirement. The sponsors of 401(k) retirement savings plans owe a legal duty to offer a mixture of investment options. Here are a few options that are typically offered:

Life-cycle funds – These funds are designed to maximize the growth of your investment until a specified retirement year. There will be funds for employees retiring in five years, as well as for those who plan to retire in 40 years. Investments become more conservative as you get closer to retirement.

Stable-value funds – These funds are designed to provide a stable return on your investment with little risk. The money you invest earns a fixed rate of interest for a specified period of time.

Global and international funds – A 401(k) may offer a fund that invests globally or in a particular part of the world.

• Bond funds – The manager of the fund buys the types of bonds described in the prospectus. The bonds pay varied interest rates and mature at different times. If interest rates go up, the value of bonds tend to go down. If interest rates go down, the value of bonds tend to go up. Balanced funds invest in a mixture of stocks and bonds.

• Growth funds – These funds attempt to make your nest egg larger. There are many different types of growth funds, whether you’re a conservative or aggressive investor.

No matter what choice you make, be sure your portfolio is thoroughly diversified.