Financial Security Index
Financial Security Index
smart spending
April 2011: Retirement savings

 

Q:

Think about any retirement savings or investments you might have, such as an IRA or 401(k) plan. In the last 12 months, have you ever had to use some retirement savings for an emergency?

Among full-time workers, 17 percent raided retirement savings in the last 12 months.
Residents of western states were most likely to have dipped into retirement accounts, at 22 percent.
Roughly one in four of the unemployed and those earning less than $50,000 tapped retirement savings.
Greg McBride

"Withdrawing money from a retirement account has significant consequences."

In the short term, you might get 70 cents on the dollar by the time you figure in the taxes and early withdrawal penalty. Not only have you depleted your nest egg but this deals a permanent setback to your long-term retirement security, because there is no way to go back and replace those savings later. You don't get higher contribution limits to make up for the early withdrawals you've taken.

- Greg McBride, CFA, Bankrate senior financial analyst

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