The pandemic and retirement accounts: More people are borrowing money

As the pandemic wears on, more and more people are having to dip into retirement accounts to make ends meet.

According to a recent data, about 22% of Americans are having to borrow money from accounts this year. According to American Consumer Credit Counseling, is also reporting that American consumers aren’t confident about the economy, due to the COVID-19 global pandemic.

Under the Coronavirus Aid, Relief and Economic Security Act (or CARES Act), some changes were made to how people can borrow money from their retirement account.

In June, the Internal Revenue Service also made some changes, allowing even more people to borrow money from retirement.

Whether it’s a good idea to borrow from your retirement account while in a financial hardship depends on the individual. The CARES Act provisions can be helpful for people in need of a quick solution.

However, those who are nearing retirement age need to use caution when considering whether to borrow from retirement accounts. Most experts agree: It should be a last resort, done only for emergencies.

Americans considering borrowing from retirement accounts should consider whether the short-term need outweighs the losses that could occur long-term. Look into other avenues, like government assistance and other loan options first.

 If you are younger and are still employed, it’s possible to repay the loan and not see too big of a hit to your retirement accounts.

The pandemic is expected to continue into 2021 and will likely have even more of an impact on retirement accounts.

It’s best to talk to a qualified financial advisor about your options so you can make the best decision about whether to take a loan from your retirement accounts — or not.

For more small business tips and ideas, follow us on LinkedIn and Facebook!

If you have other questions, email us or call 937.308.0758.