This is part two of how to retire during a recession. For part one, click here.
Don’t be tempted by the cash in your retirement account. About 1 in 5 consumers has pulled money out of retirement accounts early, according to the survey. The most common reasons were to pay off credit card debt and to pay down a mortgage. Doing so not only generates penalties, but it also means missing out on any upswing in the market while the money is not invested. While paying down high-interest debt—such as credit card balances—is a priority, Averill says money should be taken out of tax-protected retirement accounts only as a last resort.
Dust off your calculator and crunch some numbers. Most Americans say they don’t know how much money they need for retirement. Some 60 percent say they either have not started planning for retirement or they’re behind schedule. A Bank of America retirement survey conducted back in March found that 53 percent of consumers were behind schedule or had not started, which suggests that the financial crisis has caused even more Americans to get off track.
Don’t let Uncle Sam take your money. More than 1 in 3 Americans with access to a tax-protected account such as a 401(k) do not participate, which means losing out on potential savings. One in four survey respondents reported still having accounts with former employers. In general, financial experts recommend consolidating accounts so it’s easier to monitor them.
[Read full article: 7 Ways to save for Retirement During a Recession]