Comments on: Protecting retirement funds: unethical or smart?

By: Lori

Lori — Thu, 25 Mar 2010 02:23:10 +0000

I agree with Liz. I am a bankruptcy attorney and so many people come to me to file -after- the retirement and 401K’s have been drawn down to zero… not only do they still have debt to pay and now a diminished hope of a dignified retirement, but they often now have a tax bill to the IRS that I can’t help them with in a Chapter 7. It’s pretty sad when they find out they didn’t have to lose those accounts if they had only come seen me sooner.

By: lizweston

lizweston — Thu, 25 Mar 2010 01:56:39 +0000

Actually, Linda, the younger you are, the worse the move it is, because you have all those years of future compounding at stake. It’s so much better to pay credit card debt off with current income rather than to dip into your retirement.

By: Linda

Linda — Thu, 25 Mar 2010 01:30:36 +0000

Thank you for your insight. I am mulling over the same decision right now. I recently lost my job and was thinking of paying off CC debt with a portion of my retirement plan. I am only 37 and think that being debt free(CC debt is the only debt I carry) with no steady income in my immediate future is worth the cons of losses incurred

By: lizweston

lizweston — Wed, 24 Mar 2010 23:15:57 +0000

But the math doesn’t really work, Danny. The taxes and penalties will equal at least 25% of the withdrawal. Add in the lost future gains, and the current interest rate is dwarfed.

By: Danny Ngo

Danny Ngo — Wed, 24 Mar 2010 22:42:59 +0000

I see the point of protecting your future, and I agree. However, that 50k credit card probably has a 20% interest on it. I would tap into that 250k retirement account to pay off the 50k debt or at least a big portion of the 50k.

By: Mike Dees

Mike Dees — Wed, 24 Mar 2010 21:36:02 +0000

Sound advise. I agree with Liz.