Too much of a good thing?
June 6 - Boston Globe (Ross Kerber): "Record numbers of Americans are raiding their retirement savings as the economy has soured, threatening their long-term financial security to make their mortgage payments, pay medical bills, and cope with rising food and fuel costs."
Why is this happening? At first blush, it seems that the cost of living is getting away from a lot people. They're not making enough money to pay the bills. But there's another side to this. Could it be that people have simply put "too much" into their retirement plans? Perhaps some of the money that went into retirement plans should rather have been set aside as an emergency reserve.
For years, we've been hearing that everyone should "maximize" their 401k and IRA contributions. I've often questioned the logic. Especially when people don't have emergency funds set aside for the contingencies that come up in daily living. You need to know how much you need today, not just how much you want to have tomorrow.
Why is this happening? At first blush, it seems that the cost of living is getting away from a lot people. They're not making enough money to pay the bills. But there's another side to this. Could it be that people have simply put "too much" into their retirement plans? Perhaps some of the money that went into retirement plans should rather have been set aside as an emergency reserve.
For years, we've been hearing that everyone should "maximize" their 401k and IRA contributions. I've often questioned the logic. Especially when people don't have emergency funds set aside for the contingencies that come up in daily living. You need to know how much you need today, not just how much you want to have tomorrow.
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