Salt in the Wound
What happens when unforeseen disaster strikes — when Dad loses his job or when Mom asks for a divorce? Families face events that elude all careful planning. The first line of defense is their all-purpose passbook savings account, an account that is tax-disadvantaged. If things get really bad, many families find that the only way to survive is to cash out their retirement accounts. The huge penalty assiciated with that withdrawal — set in place as a disincentive to withdraw early — doubles the pain. Not only has the family just wiped out any chance for a comfortable retirement, the government just took a hunk of their only savings — at a time when the family was already under extreme financial stress.
— Elizabeth Warren and Amelia Warren Tyagi, The Two-Income Trap
