In addition to developing a basic savings plan to pay for retirement, a second major component to your retirement planning needs to be reduction of debt obligations so that you can eventually afford to retire.  If you have high debt balances from credit card debts or medical expenses, talk to a bankruptcy attorney before making drastic financial changes in your debt strategy.  Many people are tempted to pay off their credit card debts by tapping into their retirement funds.  Some people are even tempted to do the quit and get re-hired trick…. This is where they resign from their job, use the qualifying event to pull out all of their retirement savings from a 401K, and then get re-hired by the same employer, but with a loss of seniority and possibly benefits.  Using your retirement proceeds to pay debts is an unnecessary risk of your current benefits and future retirement.  Depending on where you are at in your retirement planning, you may not be able to recoup the savings that you accumulated through your retirement plan and the accompanying, accrued interest. Bankruptcy is a better option when you need to protect your future retirement and control current debt obligations.

Bankruptcy also helps keep aggressive creditors in check.  Do not be pressured by a collector that is harassing you and threatening to “garnish” your retirement funds.  Funds in 401K and similar retirement accounts are protected in bankruptcy.  This means that creditors cannot access these funds, unless you authorize them to do so.    Talk to a bankruptcy attorney first.  They can help you develop a bankruptcy plan where you can resolve your debt issues without sacrificing your retirement funds.