Think Hard Before You Dip Into Your Retirement Savings

by : Amit Kheterpal

We all have financial hardships at one time or the other. In these recessionary times it is always likely that you will lose a job or see inflationary pressures destroy your monthly budgets. In all these hard times people tend to generally go for options so that they have enough liquid cash. That said the first thing that your mind races to is your retirement savings.

The lure of that easy cash that you stashed away in some form of investment or the other is so strong that is very likely that you will take money out of those investments. You will use that money to get out of that tight situation you are in. The negative side effect is that you have just reduced a huge chunk of money from the nets egg that you were trying to build.

It is all the more necessary that you do not touch these investments as it will mean that when in the old age you need cash the most you will have no money.

To tide over these financial tight corners so need to be very strong mentally. If you are out of your job try to at least earn money for day to day expenses by working part time or working as a free lancer. That leads us to another major point which is that when you are good times you need to save for two things one is retirement and the other is days like these when you have no money or inflation is wreaking havoc on your expenses.

If there are inflationary pressures and cost is going up then make sure that you cut down on your expenses in a big way. If take your car to work then try to use a car pool which will save you gas money. If you drink coffee try to avoid those expensive coffee you get at the retail coffee shops instead try to brew coffee at home.

If you are looking at an expensive buy like a big television then put off that purchase for a few months. Avoid buying those expensive clothes and look for sale and discount signs wherever you go. All these will help you free up some extra cash for the hard times.

Make sure that you cut down on your debt in a very serious manner and free up some additional cash. Also taking money out of retirement schemes is a steep loss and to build that nest egg again will take you a few years. So make frugal living alone can help you tide over tough times and make sure that your retirement nest egg is safe. It is this nest egg that will help you when you are old and have no active cash flow to help you.