[RickFLM4]

The tax impact, as I think you know, is not just the penalty but the actual tax on what you take out. So if you have $500K down payment from retirement, I think you’d be looking at an additional $150K+ in current taxes. This, along with the prospect of needing to sell the house to live in retirement as someone else pointed out, would be a turnoff to me. We all “plan” to work a certain amount of time and save a certain amount of money, but sometimes shit happens and it would suck to need to sell the house at an inopportune time.

We went the second property route. But the combined cost of our primary + second is quite a bit less than a bank would say we could afford. I like it that way because it lets us get away, have the upside in property values from 2 properties and not touch retirement savings. If I were to do it over, I might get something closer than a 10+ hour drive so we could use it more, but I like having the second property (which is a condo). If you can get something you’d like 2 hours away and not touch retirement money, personally I’d do that.