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People work long and hard to save money for their retirement. These nest eggs are for when they reach a particular age, usually around 65, and wish to take their leave from the workforce. However, financial challenges can arise in life that cause people to draw from these savings. A job loss, unforeseen medical debt, and other surprise financial hardships may all lead a person to tap into their retirement savings.
This is probably more feasible than you think. According to Forbes, 50 percent of Americans now carry medical debt. It’s also far from uncommon for Thornton citizens to experience a layoff during their working careers. Both of these are common life situations that may cause individuals to borrow from their retirement funds.
When times get financially tough, we do what we must to stay afloat and support our families. However, it is in your best interest to avoid taking funds out of your retirement savings accounts. The following tips and alternatives can help to keep your retirement as-is, even during times of financial crisis.
Along with retirement savings, it is a good idea to set up an emergency fund. This will ensure you have money for unexpected expenses like auto repairs. For example, if your car’s transmission needs to be rebuilt or replaced, those necessary services could cost between $4,000 and $5,000. Create an emergency fund to keep emergencies handled when they pop up, thus preventing you from being tempted to take from your retirement should disaster strike.
You may wish to liquidate some assets instead of using your retirement to cover unexpected expenses. For instance, perhaps you own a motorcycle that collects dust in the garage more often than it collects dirt on the road. You may keep a fishing boat in a storage facility that rarely sees water. A vacation property, while fun a couple of times per year, could be better used to cover expenses before you fall behind. Rather than tapping into your retirement, you may be able to settle financial hardships using assets you already have but rarely use.
According to CBS News, the average cost to replace the mitral valve, a valve on the left side of the heart, is $73,154. Medical expenses such as these come without warning, and these costs could be for one single procedure alone. Mounting medical costs stemming from a surprise illness or injury may be a reason to liquidate assets in an effort to save your hard-earned retirement.
Have you or your significant other been a stay-at-home parent for an extended period of time? If so, and you’re falling behind on bills, it may be time to break back into the workforce. Transforming your financial situation from a one-income to a two-income household is a simple way that many families can relieve financial pressure without depleting their retirement savings.
There are many reasons why a household may need a significant amount of funding on short notice. Roof replacement is one example. Due to their constant exposure to the elements, roofs will need repair regularly and replacement services around every 15 to 20 years. Homeowners will pay between $4,707 and $10,460 for new coverings, on average, and this is an expense that cannot always wait.
If you begin feeling the financial crunch, you may decide to pick up a “side hustle”. With plenty of online opportunities in the modern age, it’s easier than ever to find lucrative freelance opportunities catering to all talents and fields. Writing, data entry, virtual assistant, and transcription gigs are just a few of the opportunities that can be found in demand today.
For those who would prefer to avoid virtual side work, you may also decide to reach out to the greater community. Offering services as a nanny, a handyman, a painter, or working with a trade skill provides not just money-making opportunities, but opportunities to connect with your community as a whole.
Not even a well-paying job exempts the average person from financial hardship due to a surprise expense. If you’re able, speaking to your management team to see if you’re able to pick up extra shifts, overtime hours, or additional tasks can be one way to bring more cash in quickly. Particularly in the short term, this can save you from dipping into retirement if things grow dire. Taking on additional work may also help you to replenish your retirement savings if you have previously been forced to borrow from them.
When a person’s debt becomes too much to bear, and they grow tired of the near-constant communication from bill collectors, filing for bankruptcy can be a suitable option. This is typically reserved for those who have exhausted all other options and do not want to completely deplete savings or accounts they have reserved for retirement. There are several different types of bankruptcies, but Chapter 7 and Chapter 13 are the most common.
What comes of your retirement if you file for bankruptcy? In most cases, people do not lose everything after filing. In many cases, you’ll likely get to retain retirement accounts such as IRAs and 401ks. If you would like to learn more, it is best to schedule a consultation with a Thornton bankruptcy attorney. They’ll be able to answer all your questions and help you determine which bankruptcy chapter is right for you.
Are you ready to talk to someone? Our Thornton bankruptcy attorneys are experienced in handling every type of Chapter 7 and Chapter 13 case. Contact us to schedule a consultation today.