Though many Tennessee residents enjoy what they do for a living, a considerable number of those workers still look forward to retirement time. With retirement comes a sense of freedom as there is no worry about deadlines for work assignments. However, many people with financial struggles could find themselves considering using their retirement funds to pay off credit card debt. Luckily, there are other options that people with significant debt can turn to that could help their situation while maintaining their retirement savings.
Though some people may see retirement funds as a place where money is waiting to be used, taking it out in its entirety subjects it to state and federal taxes that could significantly shave off part of the amount. This reduction may not even make the effort worth trying to use such a fund to pay off debt. By exploring other options, those consumed with debt may realize they have several ways to manage their financial difficulties without resorting to depleting money needed later in life.
While the term bankruptcy may have a negative connotation for many people, it may be because they do not have enough information regarding laws on bankruptcy and how helpful it can be. There are different types that could suit an individual’s situation if they are able to apply the knowledge they gain on the subject to how their debt burden is affecting them. Bankruptcy also does not affect retirement savings, so the financial situation can potentially be taken care of without creating a bigger problem later on.
Because bankruptcy does not affect retirement funds, it should not be ruled out as an option for those who feel that they have no other choice than to use that money. This option can lead Tennessee residents on a path to financial freedom in order to get their finances in order before leaving the workforce. Credit card debt should not determine how a person leads his or her life, and gathering information on how to realistically manage debt can be a beneficial first step.
Source:
CNBC, “Suze Orman: Don’t put your retirement on a credit card,” Sakina Spruell, Aug. 7, 2013