The Help Desk

Your tough questions. MONEY's smart answers.
Presented by

Should I tap my retirement savings?

November 26, 2012: 6:31 AM ET

I have a $325,000 home, a $250,000 mortgage and a student loan. I have been taking money out of my IRA since getting laid off, and paying a 10% penalty with each withdrawal. It could be several months before I land a full-time job. Am I better off continuing to tap my IRA, or should I take out an equity loan on my house, rent out my home and move in with family, or sell my home? — Cheri S.

Your retirement accounts should be your option of last resort. "The first thing to do is to use your liquid savings, if you haven't already," says Brent Lince of Hillsboro, Ore.-based Lince Financial Planning. This could mean using cash savings, CDs and money market accounts before tapping into an IRA.

If you've used up your liquid savings, however, your best choice may be to sell your home. Not only would it free up the equity you have in the house, but it would mean saving on the costs of property ownership, such as insurance, maintenance, and property taxes. By comparison, a home equity loan would mean taking on more debt. And Lince says that may not be a wise move when you're looking for a source of income.

In the meantime, look for other ways to reduce your cost of living. For example, contact your lender and see if you qualify for a student loan deferral. If you have a federal loan, you can find out if you qualify for deferral at the U.S. Department of education site ( That would allow you to focus your limited funds on covering your other costs.

— Austin Kilham

Got a question for the Help Desk? Send it to

Posted in: Family Money, Retirement
Join the Conversation
Help Desk

Got a question about your money? We want to hear it! Each week we're answering your questions on CNN, Headline News and

Your email or phone number won't be published; we'll use it to get in touch if we need more information about your question.
Help Desk Video
  • NEXT
    Not enough money in America's 401(k)s
    Despite the surging stock market bringing balances to record highs, the average Fidelity 401(k) account has less than $100,000 in it. That's just not enough. Play
  • NEXT
    Explaining Obama's myRA
    President Obama unveiled a new savings plan for retirement accounts, aimed at encouraging people to start building their nest egg. But how exactly does it work? Play
  • NEXT
    Tricks on how to save in your 20s
    Saving for your retirement in your 20s doesn't have to be a financial burden. Prioritizing your expenses is usually the first step in building a nest egg. Play
  • BACK
    Don't get fooled by Black Friday sales
    Here are some of the tricks that retailers use to make you think you're getting a deal. Keep an eye out for them while shopping this Black Friday. Play
Best Tips
Some of the nation's leading business owners, investors, and thinkers share their thoughts on rebuilding your wealth. More
These strategies can help you manage the challenges -- both emotional and financial -- of helping an aging parent from afar. More
You don't need to be fanatical to get to 780. Those in the know say these moves matter most. More
Featured Newsletters

Tips for saving and spending smarter.

Search This Column
View all entries from this: Week, Month
Help Desk
More help for your career, your investments and your budget.
Powered by VIP.