Unemployed and broke? Don't dip into your IRA!

Not exactly something I would ever, ever suggest. But, then, I’m not Stew over at Gather Little By Little.

He’s written two posts featuring steps to take when you lose your job. In the second one, he suggested that it might make more sense to take money from your retirement account than to sink deeper in debt.

Most advisors will tell you that this is a bad idea. I agree, for the most part, but there are times that call for desperate measures. The reality is that retirement savings are a luxury and after you lose your job, luxuries are the first thing to go.

Uh, no.

Not only no, but hell no!

I’m hard-pressed to think of a time when this might be a financially sound idea. Yes, debt is bad. Yes, you don’t want to lose your home — whether you rent or own. But leaving your retirement funds untouched is one of the few golden rules of personal finance that I do not question.

The fact is that unemployment doesn’t pay much. But, as my mom likes to say, it nicely postpones starving.

If you can’t pay your mortgage, you need to raze your budget (we’re talking scorched earth, folks), sell off whatever you can, go to a food bank, apply for social services and find the Archdiocese. Regardless of your faith, the Catholic church’s agencies will help you stay in your home.

That ought to be enough for most people in this situation. Even if it’s not, raiding your retirement funds is still a bad idea.

How many months will you keep taking money out? Does it have a logical end point? Or would you drain everything? How much of your future are you willing to endanger?

I’m sure some will argue that we can’t protect the future to the detriment of the present. Actually, in a lot of ways, we can. And should.

A lot of people simply don’t understand that their future selves will be different. I mean, they get it abstractly. But they think of their older selves as having some gray hair and a paunch.

As we get older, our health falters, and most of us reach a point where we can no longer work. That’s the true reason to be more protective of the future than the present.

Right now, most people are healthy enough to work, even if it’s fast food or janitorial or even some side work under the table. Or bartering. Something that will help keep them afloat in hard times.

As you get older, though, there are a lot more jobs you can’t do. You lose your options and, eventually, you may become completely unable to work.

I assure you, being unable to work, to earn your way, is one of the purest forms of vulnerability I have ever experienced. It’s only slightly below the week or two I spent completely paralyzed.

Most of us will have some form of disability in retirement, simply due to wear and tear on our bodies. Some will be able to work part-time if they need to. Some won’t. The fact is, you won’t know until you’re actually there.

So, by raiding retirement, you are putting a potentially defenseless person in a situation of extreme vulnerability.

Sure, you may be healthy as a horse, right up until the very end. But I wouldn’t bet on it — especially not with my retirement funds.