Before Dipping Into Retirement Savings, Here Are 2 Sources Tiffany Aliche Suggests Trying
When you put money aside for retirement, you’re not supposed to touch it until you’re actually retired. However, it isn’t always that cut and dried.
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On a recent episode of their “Brown Ambition” podcast, Tiffany Aliche — also known as “The Budgetnista” — and co-host Mandi Woodruff took a question from a listener who was considering pulling money from her Thrift Savings Plan (TSP) — a retirement savings and investment plan for federal government employees and uniformed service members to cover debt. Specifically, she was thinking about withdrawing $10,000 from her account, which had a total balance of $23,000.
After getting on her feet, the listener said, she hoped to put 10% or more back into her TSP.
Aliche and Woodruff were empathetic to the listener’s dilemma, as they said they’ve both had times in their lives where they have been in tight financial situations. In fact, Aliche said she once took $30,000 out of her 403(b) account — her entire account balance — when she was in a financial predicament and didn’t feel like she had a choice.
She advised the listener that this isn’t the ideal route, as a retirement fund is supposed to support you throughout your golden years.
“It is your younger self’s job to look after your older self,” Aliche said.
She said taking money from your retirement account should be your last option.
Take this drastic step only “if your back is super duper duper to the wall,” she said.
You might think taking money from your retirement account is the only option, but she said to ask yourself if it’s “the only truth available?”
Before making a withdrawal, Aliche recommended seeking out other resources that can help you get the financial assistance you need, without tapping into your retirement account.
She recommended looking into the following two resources, as they might be able to help you avoid dipping into your retirement savings.
National Foundation for Credit Counseling
If you’re financial situation feels out of control, getting assistance from a credit counselor could help turn things around. The National Foundation for Credit Counseling (NFCC) can connect you with a certified credit counselor in your local area.
Whether you’re struggling with credit card debt or student loan debt, trying to buy a home or are having trouble paying your rent, your credit counselor can help you get back on track. You’ll have a confidential one-on-one review of your financial goals and budget and create a personalized financial action plan.
The NFCC has more than 1,200 certified credit counselors who have served 35 million people since 2006. This organization might be able to help you avoid taking money from your retirement fund, so consider giving it a try.
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FindHelp.org
This social care network can help you find free or reduced-cost resources in a variety of areas, including food, housing, financial assistance, healthcare and more. Simply visit the website and sign up to get started.
Nearly 50 million people use this resource, according to the website. You might be able to find financial assistance that can allow you to avoid tapping into your retirement fund.
For example, if you were planning to use money from your retirement fund to pay the rent, you might be able to connect with a service that can help you out instead. These resources are here for those who need them, so take advantage of any potential opportunity to get out of the financial bind you’re currently in.
Ultimately, being in a situation where you feel like you need to take money from your retirement fund to handle present-day expenses can be tough. Just know you can get through this.
If you explore the resources above and still need to take the money out, Aliche said it happens. Just do yourself a favor and make sure you’ve left no stone unturned, because you don’t want to miss out on compound interest that adds up fast.
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