What would you like to do when you retire? Even if you don't have an inkling of what you would want to do, it's unlikely that your Social Security benefits will entirely bankroll your retirement.
We all know that saving for retirement is a lifelong pursuit, but many of us fail to participate in the task adequately.
Why don't more people save adequate funds for retirement? Often, it is due to high levels of debt. Not only can debt prevent saving money, but it can also reduce the amount of savings you already saved. Forbes magazine recently noted that the number of working Americans that have borrowed from their 401(k) is on the rise. Here are some reasons why the average American's retirement savings is not robust enough, and some possible solutions to the dilemma.
Loans such as home equity or car loans provide a solution to be able to make a major purchase affordable. While some people get a mortgage that is a little too large for them, a home loan is not always the worst debt culprit as the interest can get deducted when you itemize your taxes. Homeowners can get into trouble, however, if unexpected expenses such as major medical bills eliminate their rainy day savings.
Many get attracted to credit cards initially to gain rewards points or to get merchant discounts. The problem of revolving debt is that it tends to grow and become unmanageable. Usually, a significant expense that uses up all of an emergency fund makes credit cards a go-to funding source for expenditures that used to be covered in the budget. As the debt level gains momentum, the ability to make payments on time lessens considerably.
In this scenario, not only is money not saved, the available funds are not enough to take care of daily expenses. Add a job loss into the mix, and financial disaster is imminent. There are ways to get your finances under control, and one of the most comprehensive options is declaring bankruptcy.
Filing for Chapter 7 bankruptcy does not take away your home or 401(k) account and get you back on a firm financial footing. A consultation with a legal professional experienced in all types of debt resolution can facilitate evaluation of your particular situation.