In January 2026, the White House floated letting people use money from their 401(k) for a down payment on a home. In Episode 023, Nicky P and Rob Brayton look at how that differs from borrowing against a whole life policy, why pulling money out of a 401(k) stops it from growing, and a harder question: can home prices come down without wiping out the home equity so many boomers count on?
“Perfect is the enemy of good in many scenarios.”
White House economic adviser Kevin Hassett says the administration wants to let people use their 401(k) money for a down payment on a home. Nicky and Rob dig into the idea, what it says about the housing market, and what happens to a generation whose wealth is mostly in their homes.
What We Covered
How it differs from a policy loan. It sounds a lot like borrowing against a policy for a big purchase, but Rob explains the difference. Money pulled out of a 401(k) stops growing. With a policy loan from a properly designed whole life policy, the cash value keeps growing while you use the money.
Perfect is the enemy of good. Nicky understands the appeal. If someone has money sitting in a 401(k) and can't afford a down payment otherwise, a flawed option can still look better than none.
Penalties, taxes and the 401(k) loan. Rob walks through the costs: a penalty for withdrawing before age 59 and a half, taxes on the money, and a 401(k) loan option he says is limited to about $50,000. Those tools already exist, so he isn't sure what the new plan would add.
“A government based solution to a problem that the government created in the first place.”
A government solution to a government problem. Rob borrows a point from Nelson Nash: this is a government solution to a problem government created. He also reminds listeners that a 401(k) defers taxes to some unknown future rate, which nobody can plan around.
Is retirement a modern idea? Nicky points out that the idea of stopping work at 65 is fairly new. Rob would rather people think about purpose and creating value than about a date to stop.
Deflation is the natural state. Rob recommends Henry Hazlitt's Economics in One Lesson and explains that, with stable money, prices tend to fall over time as we get more productive. Housing could only come down gently with sound money behind it, and he calls that kind of slow burn political suicide for anyone in office.
“It really comes back to our money and it’s just we do not have a sound money system.”
Where boomers hold their wealth. Rob says Fed data shows that for most people, the biggest share of their net worth is in their home. That's why falling home prices are so hard for an older generation to accept.
Could prices reset between generations? Nicky wonders if home values will fade as boomers sell to younger buyers who can't pay today's prices. Rob says the honest answer is that nobody knows, and there's no perfect solution.
Keeping land in the family. Rob would rather keep family land than sell it, and he talks about thinking of property as something that belongs to the family across generations, not just to whoever owns it now.
Key Takeaway
Nobody knows exactly where home prices go from here, but you can decide how you'll pay for big purchases. Rob's point is that your money should keep working while you use it. That's why we use properly designed whole life insurance at Perfect Spiral Capital: you can borrow against your cash value for a down payment, and it doesn't stop growing.
Key Moments
[1:00] How This Differs From a Policy Loan
[3:00] Perfect Is the Enemy of Good
[5:00] Penalties, Taxes and the 401(k) Loan
[6:00] A Government Solution to a Government Problem
[7:00] Is Retirement a Modern Idea?
[10:00] Deflation Is the Natural State
[11:00] It Comes Back to Sound Money
[12:00] Where Boomers Hold Their Wealth
[14:00] Could Prices Reset Between Generations?
[15:00] Keeping Land in the Family
“It’s about being able to weather the storm and come out on the other side with something as opposed to the alternatives.”
Related Episodes
Episode 021: Will Banning Institutional Investors From Single-Family Homes Lower Prices? Trump's Housing Plan
Episode 015: Is a 50-Year Mortgage a Good Idea? What It Really Costs Compared to a 30-Year
Episode 048: New Homes Now Cheaper Than Old Ones: How the Federal Reserve Flipped the Housing Market
Want the full conversation, including Rob on why sound money is the only gentle way down for housing? Listen to the full episode and grab the free toolkit at PerfectSpiralCapital.com/podcast.
FAQ
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In January 2026, White House economic adviser Kevin Hassett said the administration planned to let people use 401(k) money for a home down payment. Details hadn’t been released when Episode 023 was recorded. Under current rules, Rob Brayton notes, you can already withdraw early with penalties and taxes, or take a 401(k) loan if your plan allows it.
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Rob Brayton points out that money you take out of a 401(k) stops growing. If you’re under 59 and a half, an early withdrawal usually means a 10% penalty plus income tax. A 401(k) loan avoids that, but it’s generally limited to $50,000 or half your vested balance, whichever is less.
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With a properly designed whole life policy, you borrow against your cash value rather than taking it out. Your cash value keeps growing on a contractually guaranteed basis while you use the money. Loan terms vary by carrier and policy.
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Rob Brayton notes that Fed data shows most people’s largest share of net worth is in their home. Many boomers count on that equity for retirement, so a drop in home prices hits them hardest, even if it helps younger buyers get into the market.
Show full transcript
Between The Lies: Episode 023 Transcript
Nicky P: Trump is getting involved with housing yet again. Only this time I'm seeing a few similarities to IBC if I'm not mistaken. Now Trump can't make sane decisions, so I certainly must be mistaken. Welcome to the Between The Lies Podcast, your weekly lesson on how to approach an uncertain world with positivity and balance.
I'm Nicky P. Here, my good friend and money brain, Rob Brayton from Perfect Spiral Capital, as he helps us navigate the snares and pitfalls in a world of. Trust me bro. Economics. Stick around until the end of the video for their free toolkit and be sure to like and subscribe if you enjoy what we're doing.
Rob, what in the world am I missing?
Using Your 401(k) for a Down Payment [0:00]
Rob Brayton: Wow. Yeah, this was an interesting one. It's, a scenario. Well, I mean, what we're referencing in this case is the Trump administration announced that. People would potentially have the ability to, I think it was Kevin Hassett, who brought this forward, that it would give people the ability to take money out of their 401k toward a down payment on their home.
Now they're still in the process of kind of hashing out details. I apparently, they may be out sometime this week, I don't know. But it would allow someone to remove money from their 401k toward that down payment. I don't know what the tax implications of that are gonna be, you know, we'll find out.
But it's, it is kind of interesting that they're allowing people to do that or considering it. That seems to me more like a, in some respects, a desperation play to get people to buy homes that maybe couldn't otherwise. But there's a lot of implications that are at play in this scenario. And it is interesting that you brought up IBC.
How This Differs From a Policy Loan [1:00]
Rob Brayton: Because even though it sounds similar, it's actually quite a bit different. In this scenario, somebody would actually be borrowing, well, they're not actually borrowing, you're actually removing capital that's at work. Hopefully in your 401k, you're pulling that out and it's now, you've now stopped any earning capacity on that, that capital, so it no longer can earn funds.
It would have to be, you would hope for. Earning potential in your home in that regard, perhaps, however, if you're already struggling to save and you're pulling money out of your only savings tool, I don't know that that's really a good thing. You probably shouldn't even be. Maybe not even be buying a home at that point.
But, yeah, I mean with IBC, it's a, it's a significantly different scenario which we can get into in terms of details where we're actually borrowing other people's money, meaning the insurance company's money against the, capital that we've built up within our whole life policy to be able to, leverage that, that capital towards something else.
So in this. Scenarios. Yes, somebody could do that same concept and not impact that ongoing compounding that's taking place within the policy where in this situation, someone would certainly be impacting the future earning capacity of that money.
Perfect Is the Enemy of Good [3:00]
Nicky P: Definitely understand that. I guess the first thing I like when I, what I say, when I said why it reminded me of IBC is the idea of like, so at the very least this is giving somebody.
A different place to draw capital from, like to do the things that they may need or want to do in their life. You know, perfect is the enemy of good in many scenarios. So it's like, yeah, I'm the surface. I certainly see like, why. Yeah, IBC is definitely better on, on a whole bunch of levels.
But is this worse than like, the traditional place that we've locked people into? Really?
Rob Brayton: I guess it depends. What do you mean by worse in the traditional deal?
Nicky P: Well, I mean, the ultimate ability, the ability, this does offer people the ability to get capital they would've otherwise not had the ability to do.
And in. With that, it's also their capital, essentially. They're not pulling it from someplace else. And maybe Yeah, they're not, they're, it's setting them back on their saving journey, but at least they have the forthrightness to put some money into a retirement account anyways.
Rob Brayton: Sure. I see where you're going.
Yeah. I mean, certainly yes, it would, it would give somebody access to funds that would typically just be sitting otherwise without any access to it. You know, again, that's where I think these details are gonna be really, really important for us to see hopefully this week, if that's what they're talking about.
Penalties, Taxes and the 401(k) Loan [5:00]
Rob Brayton: Because if somebody's under the age of 59 and a half, as you know, today, there's the tax that's disguised as a penalty. If you withdraw money from those funds, you know, how is that gonna be navigated? You know, the, you're giving up. You know, as we've talked about that, that future rate of return, but at least somebody would have access to that capital per se.
I think you would also have to be, or plan to be a, you know, an honest banker in that situation. So you'd have to have a plan to want to try and replace those funds as quickly as you could. In an ideal situation, I would say if somebody is gonna tap a 401k. For down payments or something like that, they would be better off to exercise the loan function.
However, even in that scenario, you're still limiting the earning capacity and you're also limited on the amount that you can access. So limits are about $50,000 that somebody could tap, depending upon the size of their 401k in a loan, in a loan scenario. You know, those are options.
A Government Solution to a Government Problem [6:00]
Rob Brayton: Those are things that exist. But I think the aspect that we need to understand is, and I think that, I think Nelson highlighted really well in Becoming Your Own Banker, is that all of these things that we're seeing, particularly a 401k for example, it's a solution to a pro, a government based solution to a problem that the government created in the first place.
So taxation is the, you know, something that government has created 401(k)s. We're supposed to help people save in a tax advantaged manner. Yet what are they helping people to do? All they're doing is taxing a larger amount later on in their life, at a future unknown tax rate or a tax rate. So is it really solving a problem?
Not necessarily, it's just delaying the same inevitability that they're gonna have to face regardless where, you know, I'm not saying that IBC is the perfect solution to this same problem, but it does give somebody a much better scenario in which to, work from if they're going to be using capital of any sort or savings of any sort towards the purchase of a home.
There's lots of ways to look at it, but I mean, that's one option of course.
Is Retirement a Modern Idea? [7:00]
Nicky P: To me, there's so many problems with the 401k in general, and not least of which is, that's like, okay, you kinda get a crappy return on it to the first place if it gives you what it gives you when eventually it happens.
It's also, you know, not to get my own personal views on things too mixed in here, but it's kinda centered around the idea of a retirement. And I don't know that the idea of a retirement is an idea that has any merit. Like the idea of, oh, well, hey, there's a point in my life where I just get to quit working from a social level.
The figures on people that die immediately when they retire because they have nothing to live for is pretty insane, to look at. Moreover, it's like. How often I is retirement look like anything but abject poverty for people. I mean, it's this idea, it's. At no point up until boomers did the concept ever exist.
And then I have a feeling it's going to die with our generation. Like the idea of a retirement, like, well, just this idea of like going on a permanent vacation. How, where does that creep into anything other than like an overly wealthy system or people who believe they're overly wealthy and can, you know, not do work.
Little. They know they robbed from their grandchildren too. Fund those quote unquote retirements
What Is Your Purpose? [9:00]
Rob Brayton: In some cases. Yeah. I, you know, I, you bring up a really interesting concept in a, in a good point. And I know that maybe it's not totally related to what our talk, what we're talking about, but it is in that we have to understand like, what is our real purpose?
Like what are we here to do? I think if somebody figures that stuff out and what does that purpose look like as I age, and what sort of value creation can I generate for other people as a part of that aging process? Retirement is, it's a more modernized concept. It did. It just didn't exist before and I think that's something that people need to really start thinking about is you should be in more control as you get older.
You know, I think a proper structure, if we're talk, tying this back to finances, a proper structure of financially allows you to be more in control of what you decide to do. But that really requires you to have a sense of purpose and what is that value I can provide to other people. That's something that isn't taught, that's not something that a lot of people are talking about.
Deflation Is the Natural State [10:00]
Nicky P: Well, but moreover, what is the given? What is the given in that situation? Is that the value of whatever is going to constantly go up or you is going to constantly inflate, things are gonna cons, like you're going to have things that are just. Constantly. Well, deflationary is the natural state of things, and if we let them do that, maybe some of that would happen, but not when our goal has economic resignation is to infl, inflate our prices and make everything more expensive.
In locker. Like when you lose 10% of your everything, every decade isn't, is that what it is? Like you lose 2%.
It Comes Back to Sound Money [11:00]
Rob Brayton: It's even more than that. When you actually look at the money supply, it's significantly more, sadly. But I mean, I digress on that point. I would just say that when you, what, when we think about what's causing a lot of these problems and why people are always chasing this, why are home's unaffordable?
It really comes back to our money and it's just we do not have a sound money system. So therefore all these assets, all these things just keep exploding in terms of the quote unquote cost. Yet the earning power, the savings power is constantly diminished. And I mean, there's tons of information about this and I would just challenge any of our listeners to go, you know, read economics in one lesson from Hazlitt.
Right. That's a great, great book. I'm actually reading it again right now. And then there's others as well where, you know, where if we have a scenario in which we have a stable currency and a stable money supply, a lot of these problems start to go away. So if we wanted to actually get there, we would have to really start holding people accountable to do that.
And that's really hard to do in our current state.
Where Boomers Hold Their Wealth [12:00]
Nicky P: I was listening to a podcast, I think that, and I wanna say it's probably Gold, Goats 'n Guns, but one of the points he's brought up is like she Trump knows how to fix this problem and it keeps offering us other things because all of the real fixes to the problem are going to wipe out.
All of the value that the boomers have accrued, like their home value is where all of their equity is. It's where all of the value that the economy has given them. So if you bring it down to like home values, down to what they actually are, then they've done nothing and accrued nothing over the past 40 years.
Rob Brayton: Yeah. If you wanna, if you want some really interesting stuff on this, the Fed has a lot of data, like we talked. Badly about the Fed, about the government all the time here, but let's be honest, one thing they are actually really good at is data collection. And if you look at the percentage of net worth that most people have, it's in their home.
So if you pull that away from people. Because you're actually trying to solve the real problem. You have a lot of people that are really struggling because they haven't saved enough to begin with. But I mean, you're, I think you're right on, you're on the right track there. Like if you truly wanted to fix this, you actually have to get into a slow burn deflationary environment, particularly as it comes to all assets.
And you only can do that through stabilizing the money supply and some of those things. So, is that the ideal route to go? Yeah, it really is. But who's strong enough and willing to do that. Like from a political perspective, it feels like suicide.
Nicky P: Yeah. What politicians gonna go and say, you're all gonna hurt.
Rob Brayton: Yeah.
Nicky P: And it's gonna be better when we're done, but you're gonna hurt because there's no incentive
Rob Brayton: No
Nicky P: To do that.
What You Can Control [13:00]
Rob Brayton: Sadly, there isn't. So they're just gonna keep doing what we're doing and making it worse until it ultimately fails. And that's the really sad perspective for a lot of people, is that. I hate being a dooms doomsday person that way.
Right. But I, what are, what is anyone doing to help change the course? And that's an honest question we have to ask ourselves. So if we know that that's the case, and then no one's really making those tough choices. What do we, what can we do? And that's really about a lot about what we focus on is what can we do?
And it's creating good, stable, strong assets in your own portfolio. And then creating scenarios where we can go use that capital to acquire more assets that are gonna allow us to weather that storm. And it's about being able to weather the storm and come out on the other side with something as opposed to the alternatives.
Could Prices Reset Between Generations? [14:00]
Nicky P: Here's something that I think about and it's, is it possible what they're trying to do is limp the value along long enough that. When the boomer generation dies off and all of that, they're not going to feel the loss of the equity in the prices because they're going to die. We're going to have to buy cheaper homes anyways, so when.
They get sold off as super cheap at a fair market value to the next generation, then we won't, we're not gonna notice our parents lost 'cause they're debt, I guess is the idea. Yes. If they lose, you know, 80% of their value, they're gonna be feeling it. Meanwhile, we don't have that. It's not our value.
Maybe we're expecting to inherit some value in that, but I've certainly never thought, oh, I wonder how much money I'm going to make off my parents' house when they pass.
Keeping Land in the Family [15:00]
Rob Brayton: I mean, if you think of, I know, like I'll speak personally to our situation. You know, we want to keep that home and that that land in the family.
And so there would, there's no way that any of us want to just go say, Hey, let's liquidate this. So we have. Some money like that. I don't know how many people are really thinking that way, but some, I know it does happen.
Nicky P: Not a lot, Rob, but you know, both know the answer's not a lot.
Rob Brayton: Yeah, so I mean, I don't personally look at it that way, but I know there are people out there that are like, well, when you know, mom and dad pass and they had everything tied up there, if we let it go, we don't really care.
You know, have to take a hit on it. They probably would.
Nicky P: I'm not thinking of it as something that's mine.
Rob Brayton: Yeah.
Nicky P: Whereas they do.
Rob Brayton: I don't either.
Nicky P: So if all that value kind of gets sucked out in the transition between generations, you know, is that kind of the move, maybe to reset things?
Rob Brayton: I don't know. I think your guess is as good as mine there.
Right? Because I was like, well, okay, the, it's not like somebody's sitting around with a. A stopwatch or something looking at it like, oh, here's where the last boom boomer was born. Oh, here, cut it off. Right? And now we can do it. I dunno that that's really the case, but,
Nicky P: Well, no. And grass, that's not the case.
But it's like you're gonna watch the value change as those houses are forced to sell off as they die. It's just kind of going to, it feels like it's something that's almost going to happen naturally. It is going to naturally raise the supply that as they start entering the market and they're not looking for the ridiculous investment, you know, inflated investment, recuperation, then we start paying, well, this is what it's worth to me.
You know, for the next gen, you know, obviously no expert on housing here, folks. I'm just, you know, playing the layman, asking the questions. Well, this is the weird thing that I see. Maybe this is what's gonna happen. Hoping that one of these Perfect Spiral Capital boys knows more than I do. Rob usually knows more than I do.
Housing's just a, it's a bear, right? I,
Rob Brayton: I don't know. It, there's a lot of things that could take place here yet that we haven't seen. And who knows? Maybe somebody, maybe there are a group of people that wanna do the right thing and may, you know, we could see a full recovery that way. I do. I think that's the way it's gonna go.
No, but I'm optimistic that it could, you know, it could happen. These are things, there's real solutions to make it happen, but I gotta prepare myself that it doesn't.
Outro and Free Toolkit [18:00]
Nicky P: Optimism is the reason we're here. Rob. Optimism is the reason we are here. So. While we're thinking optimistically, what is one of the most optimistic decisions that somebody can make right now Is that to by chance, go and hit that link and pick up that toolkit?
Rob Brayton: Absolutely. Yeah, if you're, if you're interested in some of the stuff that you, we've been talking about today, I highly encourage you to go to perfectspiralcapital.com/podcast. Check that link for our free toolkit. There's lots of great information in there. You're also gonna be able to get a copy of Luke's bestselling book Between The Lies, which helps you to see some of the stuff that we've been talking about today.
And, with that, I mean, you'll be able to, have our contact information in there too, if you'd like to continue the conversation and we can talk more about how, in different ways that we could structure something that's gonna help you be able to go forward and, and have a more positive outlook.
Nicky P: Alright folks.
