Obviously, many employees who have lost their job or are looking for ways to make certain costs that may arise during the time between when they first become unemployed and when they find a new job opportunity, but there are some men and women who have looked into loans from retirement funds, like a 401(k) loan, that may help them with their finances until they can find a job that will alleviate any financial distress that has arisen as a result of unemployment. Yet, some individuals may find that after they have become unemployed a 401(k) loan is not an option, and there are also many drawbacks to this type of loan that employees need to consider as there are alternative options that are currently in place to help those who are unemployed with certain financial obligations.
However, some 401(k) plans may allow for penalty free withdrawals or have hardship provisions built in to help investors when it comes to certain costs like medical treatment or even paying for health insurance, but there are cases where an investor can use these funds if one of these hardship causes happens to be in place and they may be finding themselves in a difficult financial position as a result of a change in their employment situation. Yet, this is where many financial advisers often caution investors against using retirement funds, as difficult times now may be overcome and consumers can bounce back but if one’s retirement funds are severely depleted this could lead to a need to work well into one’s retirement years or a drastic cost of living reduction in terms of the income one has after they have retired.
For consumers who are currently struggling to make certain payments on their debts, when it comes to various creditors there may be some hardship assistance plans available directly from these sources that can be of use to a consumer. As an example, credit card or personal loans that cannot be paid due to unemployment may not have to be paid from a retirement fund but consumers may be able to simply contact the lender, offer evidence of hardship that is a result of no fault of their own, and in some cases they may get a period of forbearance or a reduced payment plan.
Also, consumers may be able to take advantage of certain mortgage assistance programs help those who are unemployed, as there are certain initiatives in place that can be helpful when it comes to either making a homeowner’s mortgage payment or allowing the homeowner a forbearance period in this case as well. While there are state programs like the Hardest Hit Fund or the Home Affordable Unemployment Program that consumers may be able to look into, these opportunities through either their creditors or federal programs are being stressed as alternatives in cases where unemployed individuals feel they should use retirement funds to pay certain obligations, as keeping one’s retirement savings in place, in the opinion of many, will be a much better strategy in the long run.