top of page

Should Retirement Funds Go Toward Current Needs?

Smashed piggy bank

This past year has been financially trying for many individuals and families in the face of record inflation numbers and a looming recession (US Inflation Calculator).


And with rising credit card debt that averaged $9,000 per household in the first half of 2022, Americans may be tempted to turn to other sources of income and savings to pay down these balances.


Using retirement funds presents a few key complications that can make it a bad financial decision long term. 


First, you may pay considerable taxes on any withdrawals. For example, a 401(k) is meant to be left untouched until age 59½ (Fernando, 2022). Try to withdraw funds prior, and you’ll pay income taxes in addition to a 10% penalty. Fees and taxes exist with IRAs and Roth IRA accounts as well (Segal, 2022)*.


As a general rule, you should leave your retirement funds alone unless you have no other way to pay for essentials like food or housing. Instead of tapping into your savings in advance and losing out on tax breaks and interest accrual that could benefit you later in life, consider these tactics:

  • Debt consolidation - This refinancing option could help you by combining all of your debt into a single loan that can be negotiated into a collective, possibly lower, interest rate.

  • Balance transfers - By moving debt from one account to another, you may be able to pay off the balance with a lower interest rate.

  • Budget cuts - Evaluating your regular spending can often reveal areas where you can cut back, diminishing the ongoing amount of spending and debt that you’re taking on.

  • Hardship loans - These loans can have faster funding and lower interest rates to help you address payments during difficult times without touching your savings.

Ultimately, if you are concerned about your finances, know that the team and I are here to help.

If you have further questions about financial impacts do not hesitate to email us at, call 248-733-4344, or set a time to talk on our calendar

The information contained in this material is for general information only and are those of the author, and not a recommendation or solicitation to buy or sell investment products.

This article contains links to third party websites. Stalt Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Stalt Financial's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.


bottom of page