Should You Tap Retirement $ During Covid-19 Pandemic
Q: When do you think it makes sense to take money from retirement if you’ve been struggling financially during the Coronavirus pandemic? Carlos, Paterson, NJ
A: You should always make financial decisions based on your specific financial and personal situation not based on generic advice you hear from others. Under the legislation Congress passed in March, you can withdraw up to $100,000 from retirement savings without triggering the 10% early withdrawal penalty that normally comes with it however, it’s prudent to liquidate retirement money only as a last resort–meaning, after all other possible avenues to get money fail. If you find yourself in a financial hole, the first thing you want to do is stop digging, so if you’ve lost your job or have been furloughed, immediately cut all your non-essential expenses to the extent you can and here are 3 potential options to consider: 1) Forbearance is the first option to consider because it has been offered by most major financial institutions, so if you need it, you’d be crazy not to take advantage of it. 2) Personal loan from a bank/credit union or private loans from friends or family 3) Another option is modifying or refinancing existing debt–there’s certainly never any guarantee that you’ll be successful but it’s worth a try before you raid your retirement savings. Thanks for your question, Carlos.
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