By Angelo Orlando
Everywhere I go, I hear stories of people in dire financial straits, considering actions they never would have taken during less desperate times. Things like raiding your IRA -- once seen as a last-gasp measure -- now appear to some like reasonable steps to help make ends meet.
But the news isn't all bad. According to a report last month from the Investment Company Institute on the role that IRAs play in people's financial planning, many investors have a strong investing plan to follow to ride out the recession -- and should be able to avoid ruining their future retirement prospects by dipping into IRAs.
Not pulling out The best news from the report, which covered the 2007 tax year, was that the vast majority of people didn't tap their IRAs for purposes other than retirement. Among the households that took money out of their IRAs, more than 80% were made by people who were already retired. Just 5% of those 59 and younger -- who would generally have to pay a 10% penalty to get at their IRA money -- made IRA withdrawals.
Moreover, it's apparent that most retirees see IRA money as a backup for their other savings. Over 60% plan not to take money out of their IRAs until age 70 1/2, when the tax laws force them to start making withdrawals.
But the news isn't all bad. According to a report last month from the Investment Company Institute on the role that IRAs play in people's financial planning, many investors have a strong investing plan to follow to ride out the recession -- and should be able to avoid ruining their future retirement prospects by dipping into IRAs.
Not pulling out The best news from the report, which covered the 2007 tax year, was that the vast majority of people didn't tap their IRAs for purposes other than retirement. Among the households that took money out of their IRAs, more than 80% were made by people who were already retired. Just 5% of those 59 and younger -- who would generally have to pay a 10% penalty to get at their IRA money -- made IRA withdrawals.
Moreover, it's apparent that most retirees see IRA money as a backup for their other savings. Over 60% plan not to take money out of their IRAs until age 70 1/2, when the tax laws force them to start making withdrawals.
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