Money With Google

The New American Financial Fad

More Americans are raiding their nest eggs now than ever before. Many factors are forcing Americans to dip into retirement funds early. Layoffs. Job searches. The need to get some help to pay the mortgage. The reasons are countless.

Those who have already dipped into their retirement funds are counting their blessings. They feel as if they are the fortunate few who actually have a retirement fund to dip into. A recent Hewitt Associate study gives us a glimpse at how bad things really are. This survey showed that 6.2 percent of people who had retirement accounts at large corporations had already taken out a withdrawal as of September 30, 2008. In 2006, only 5.1 percent of these people took out early withdrawals.

So what is happening to the other thousands of people who have recently been laid off or face financial challenges from the financial crisis? Many of these people are foreclosing on their homes and are living off of their credit cards.

Watching the credit card bill pile up is certainly not a great way to live. Credit cards can be a real lifesaver, if used correctly. If not used correctly, credit cards can become a huge detriment.

Whether you are considering living off of your credit card or dipping into your retirement fund, both methods can create a huge financial burden. Living off of a credit card without any incoming cash can lead to bankruptcy in a hurry, and is not the best financial advice. Making a withdrawal from your retirement fund early will minimize the amount in your savings account and often is coupled with a large fee. Both of these methods should be used as an absolute last resort.

The economy is starting to improve. But, Americans around the country are still having to make crucial financial decisions. Live off the credit card? Take out an early withdrawal from the retirement account? Hopefully, these decisions won’t have to be made in such abundance in the near future.