First Person: I Should Never Have Taken That Early Withdrawal From My Pension Fund

Yahoo Contributor Network

In the world of financial mistakes, mine was huge. No one in her right mind withdraws retirement money before retirement. I am the exception.

Why would I endanger my future?

Even as a child, I was a saver. Always stashing cash in my bank account, I frequently paid my family's bills as a teen. So, why would a thrifty person like me wipe out her retirement funds? Unfortunately, it's not a pretty answer.

As is common for so many women, I was trapped in an abusive relationship. Abusive types tend to control significant others by restricting how much they can earn and save. I was no exception. By the time I left, I only had what I could carry. Relying on public funds, like welfare, was not an option. Adding to the drama, I was finishing a degree program with college bills attached. Consequently, I chose the only option I could fathom at the time, which was early withdrawal of the public pension I had earned as a teacher.

Any regrets?

To say I regretted this decision is an understatement. Withdrawing funds from a pension is a taxable event, which results in reducing the payout amount significantly. Yes, withdrawing the funds helped me jump over my financial hurdle at the time. Nevertheless, considering the reduced amount I received and loss of those retirement funds compared with what I had to do to replace them, was a financial setback. Twenty-five years later, I still kick myself.

How did I rebuild my retirement funds?

Rebuilding my retirement funds has been a slow process. Funding IRA's with the maximum amount allowed by law is my primary mode of retirement saving, as I no longer have an employer pension or 401K. However, it has been fruitful. These funds are invested in the market and have done very well. I also spend much less than I earn, so there is always cash left for investing outside the IRA's.

My advice to those walking in my shoes?

For those who feel the need to tap into the pension early, my advice is to consider other possible options first. Work a second job. Apply for student and/or personal loans. Cut living expenses as much as possible. Consider anything else to avoid withdrawing the easy cash. Not everyone can replace what is lost. Once it's gone, it may be irreplaceable. Retirement could be just a dream.

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