Credit Card Debt Making Retirement Savings Impossible for Growing Number of Americans
Americans are scrambling to find money to pay the bills - and for some, that now means dipping into retirement savings.
According to a new study by HelloWallet, one in four consumers have raided a 401k to help cover a mortgage or credit card payment.
But while cashing in that IRA early may seem like a short term solution, it doesn't actually solve the problem, say bankruptcy attorneys.
If you can't afford the bills when you have a regular paycheck, imagine trying to pay those same bills - which may be even larger if you continue to add to credit card debt - when there's no paycheck coming in.
In addition, borrowing from a retirement fund comes with tax consequences, penalties, and lost interest.
Already, the average baby boomer is roughly $500,000 behind on retirement savings, according to a recent USA Today article. At the rate we're going, many Americans will be unable to retire at all.
In the vast majority of cases, the problem is too much debt.
With today's seniors carrying escalating amounts of mortgage debt, credit card debt, and even debt from student loans, too much money is going toward covering interest and fees - rather than actually paying down debt. And that's not even taking into account the medical bills that frequently derail retirees' budgets.
The only surefire way to save money for retirement is to lower debt to a manageable level. Bankruptcy can be the best way to do just that.
If debt is the source of your financial troubles, the sooner you file for bankruptcy the better.
While many put off seeking help for their debt, eliminating debt through bankruptcy when you're younger and still working means more time to rebuild credit - and your nest egg - before retirement.
For instance, bankruptcy can free up enough of your paycheck to help you finally start an emergency fund. Financial experts recommend socking away enough cash to sustain you through months or years without a paycheck.
With enough of a cash cushion, you can handle unexpected circumstances such as medical costs, car repairs or home improvements without robbing your retirement savings blind.
Retirement should be something to dream about, not dread. Bankruptcy can get your financial ducks in a row today - so that, in the future, you can enjoy your reward for a lifetime of hard work.
If you're drowning in debt, call DebtStoppers at 800-440-7235 to learn whether bankruptcy is a viable solution to your financial problems. Contact us now to schedule your free personal debt analysis with one of our experienced bankruptcy attorneys in Tennessee, Atlanta and Chicago.
More Blog Entries:
Helping Family with Financial Burdens Leads Some to Seek Tennessee Bankruptcy: January 13, 2012
For Young Americans Trapped Under Crushing Credit Card Debt, Bankruptcy Can Be Saving Grace: January 17, 2013
Additional Resources:
More Americans Raiding 401(k)s to Pay the Bills, by Chris Jansing, NBC News
Retirement Living: Debt Holds Many Boomers Back, by Rodney Brooks, USA Today