Using a 401(k) to Achieve Your Other Financial Goals 86 If your child decides not to go to college, you can always name a new beneficiary, as long as the new beneficiary is a family member of the original beneficiary (that is, a sibling--halfand step-, cousin, niece/nephew, parent/stepparent, child, grandparent, aunt/uncle, mother-/father-/sister-/ brother-/daughteror son-in-law, spouse, and so on). Buying a Home This is a tough one because many 401(k) plans allow extended-term loans (for, say, 15, 20, or 30 years) for the purchase of a primary residence, which is exactly the problem. Follow the logic: You take a 20-year, $20,000 loan from your 401(k) account for the down payment. Now ask yourself, "What's the likelihood of my staying at this company for the next 20 years?" If the answer is "Not very likely!" ask yourself another question: "How will I pay back that 20-year, $20,000 loan when I leave the company?" Get the point? Instead, try a Roth IRA as an alternative savings vehicle. Good Uses for 401(k) Plans As your 401(k) account increases in value, it actually diminishes your need for certain types of insurance: · Life insurance--As you build wealth within your 401(k), your need for life insurance may dimin- ish. Life insurance for most middle-income families should be used to protect the income of the breadwinner(s) and ensure that the dreams of the family come true. However, purchasing in- surance should not be an excuse for not saving. Our Advice