Not Good: Unemployed Workers Taking From Their Retirement Funds

July 18, 2012  |  

This year, one-third of the out-of-work have used money from their retirement funds to pay the bills. And there are many who are defaulting on their 401(K) loans and incurring taxes, penalties, and fees. That amounts to $37 billion in lost retirement savings per year.

And if that’s not enough, many unemployed people are age 50 and over, meaning they’re approaching retirement with little in the bank.

A report from Navigant Economics suggests loan protection insurance is a good way to protect against lost savings. The Los Angeles Times also offers a few tips for managing your 401(K) including:

  • Brush up on the rules regarding your 401(K). Many people haven’t even bothered to look at what’s what over the past few years because of the toll The Great Recession has taken. And on July 1, new federal regulations went into effect that require companies to be more transparent about any fees they’re charging.
  • Get hip to the different investment options your plan offers to make sure your plan is working hard for you.
  • Increase the amount you’re saving from year to year.

Happy saving!

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