Recession Takes a Slice Out of Retirement Savings

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Last year nearly 20% of Americans over the age of 45 yrs used retirement funds to pay their living expenses. As sources of income go, retirement savings should be a last resort. Why? First, early retirement funds are taxed at a higher rate than if you take the funds after the age of retirement. Second, funds in a retirement account are protected from creditors in bankruptcy and under most state laws. Once the retirement funds are transferred out of the retirement account, they are more susceptible to garnishment, liens, etc. by creditors. Finally, retirement is a nest egg that you rely on when you stop working. Dipping into retirement savings may require one to work longer than one's health may allow. If at all possible, use retirement funds as a source of income only as a last resort.