So you think you are ready to retire. Have you checked your retirement account? Are you ready now? For many Americans the thought of retirement income included Social Security, personal savings and their retirement accounts. But thanks to the “Great Recession”  savings and retirements have been all but depleted. And with the threat of a bankrupt Social Security Administration, it may be that most of us middle aged folk will be working our entire lives. Retire? Pshaw..!

A recent poll showed that over 59 percent of Americans were very or moderately worried about having enough money for retirement.   So what happened?

Well, Social Security has been compared to a pyramid scheme that is just about ready to collapse. Fraud and overpayments have pretty much busted that entitlement. Savings? What’s that?  And retirement? For many Americans, this has been tapped to help with their current budgets. Much like using the equity in their homes during the times when home values rose unrealistically between 2005 and 2008, many people are just now starting to realize what exactly they have done.

In the years when values of real property where inflated, many people used the “phantom” equity in their homes as their personal piggy banks. Eventually, when the housing market collapsed, these people found their houses underwater and so began the great foreclosure rush in 2009. America is still trying to recover from this debacle.

Now, people are eyeing their retirement accounts as a source of income. But what other options are there? Rents continue to rise, gas and health care prices continue to skyrocket upward. And with the continued high unemployment, what are we supposed to do? Tap your retirement or eviction? Cash out or eat?

So we cash out. But consider the penalties. 10% early withdrawal to be exact. This coupled with your regular tax bracket could affect next tax season taxes. Now you owe the IRS which causes you to cash out more of your retirement, and so the circle continues until the retirement well is completely dry.  This has been such an issue recently in America, that president Obama’s original “Economic Rescue Plan” included a clause allowing people to cashout their retirements, up to $10,000,  penalty free. And while this may seem like a good idea, it has yet to be implemented. I am not holding my breath on this one.

While cashing out a retirement may be necessary in these hard times. It must be managed carefully. If you are not paying attention, you may find yourself without anything to retire on in your twilight years.

It has been said that the economy is on the rebound and improving. Home values are finally improving and stabilizing and employment is slowly improving as well. But it will be a long road to recovery. So hang in there everybody. This too shall pass. We can all look forward to better times. Our grandparents survived the Great Depression and we too, will survive the Great Recession.

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