These are tough times on the financial front. However, you don’t have to watch your retirement hopes slip away from you. You’ve been planning for your future and saving for retirement. But what do you do when your expenses outgrow your income? Is it wise to make early withdrawals from your retirement to pay for your expenses today? Many retirement plans penalize for early withdrawal. According to IN.gov, taking a lump sum distribution. “gives you the freedom to do whatever you want with the money. But beware: at the time you cash out, you will owe all applicable taxes. If you’re younger than 59-1/2, you’ll pay a 10 percent penalty plus state and federal income tax on the full amount of your distribution (including the penalty.) This choice may also affect your ability to receive unemployment compensation . . . Also, if you are vested, you will lose your right to a lifetime pension benefit.”
If you are overwhelmed by debt and cannot seem to catch up on your bills it is important to know there are alternative solutions to tapping into your retirement. If you are not ready to empty your nest egg solely to survive today and potentially exhaust your funds for tomorrow you may want to consider bankruptcy. For more information on bankruptcy please contact Fears | Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.