5 Crucial Money Decisions If You Are Forced to Retire Early

Do not dip into your retirement account

You should avoid withdrawing money from your 401(k) account — even if you are cash-strapped — for two reasons. First, if you have not reached the age of 59½ you will have to pay a 10% penalty on the amount you withdraw.

Secondly, and more importantly, early withdrawals disrupt the compounding interest effect and reduce your overall earnings by a significant extent. You can put the money in your 401(k) account to good use by transferring it to a rollover IRA instead.