Be financially smart and keep your hands out of your retirement pocket

    Everyone who is financially savvy or at least know a thing or two about money, knows it’s important to save up for retirement. We don’t want to get to the point where we are one step closer to our golden years and dream of taking a cruise ship or a nice long vacation, and instead we are faced with the cruel reality of having to keep working longer just to be able to afford to retire. It’s smart to think ahead and start saving so you can enjoy later on in life and be worry free.

    When you are out there job hunting, it’s always good to check out company benefits packages and make sure you keep that as a priority if applying for a job. Many companies offer their employees the chance to pay into retirement accounts like:

    •         401ks
    •         403bs
    •         IRAs

    You are technically allowed to draw out of these accounts before your retirement, but is it a good idea? What if you really need the money to cover unexpected bills or high debt? Most financial experts will tell you that, actually, the financially smart decision is not touching your retirement savings if at all possible.

    You might be wondering what the big deal is. After all, it’s all your money, isn’t it? Well, smart money says that you should leave your retirement alone because:

    You’ll Be Stuck with Penalties

    Most retirement accounts will slap you with a 10% penalty for withdrawing funds before you reach the age of 59 ½. This penalty can cut into your savings, taking away your money, making a retirement account withdraw a bad way to handle unexpected bills or debt.

    You’ll Take a Hit with Your Income Tax

    Generally, any withdraws from a retirement account will count as part of your income for the year. This means that, depending on how much you withdraw, you could:

    •         Be Pushed to a Different Tax Bracket
    •         Lose Out on Deductions and Credits

    Note that not all retirement accounts come with this income tax cost. Roth IRAs, for example, will not force you to pay income tax on withdrawals.

    You’ll Be Cutting into Your Retirement

    It might go without saying in most cases, but your retirement fund is there to support you after you retire. If you withdraw money from it early, those funds won’t be there when you need them. This is, perhaps, the biggest reason that financially savvy experts recommend that you don’t touch your retirement account.

    Fortunately, you have other options to handle debt and unexpected bills.  You might be able to get the money you need by:

    •        Taking Out a Title Loan on Your Car
    •         Getting a Short-Term Loan from Your Bank or Credit Union
    •         Checking Out Your Options with for Government Assistance

    Make sure you take the financially smart option and leave your retirement fund alone if that is at all possible in your situation. You will have a much easier and smoother ride later on in life when you make smarter choices with your retirement accounts and your life savings. It’s your time to save!

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