Retirement Funds for Current Needs

This past year has been financially trying for many individuals and families in the face of record inflation numbers and a looming recession.   And with rising credit card debt that averaged $9,000 per household in the first half of 2022, Americans may be tempted to turn to other sources of income and savings to pay down these balances. In fact, I’ve had a few clients reach out about tapping into their retirement savings. Using retirement funds presents a few key complications that can make it a bad financial decision long term and can negatively affect your retirement planning.   First, you may pay considerable taxes on any withdrawals. For example, a 401(k) is meant to be left untouched until age 59½. Try to withdraw funds prior, and you’ll pay income taxes in addition to a 10% penalty. Fees and taxes may exist with IRAs and Roth IRA accounts as well. Costing yourself to access your own funds should be avoided when possible.   As a general rule, you should leave your retiremen