Dear Debt Adviser,
I have about $17,000 in
credit card debt (I paid one card completely off -- hooray!) and a total debt of about $33,000. I'm making my payments on time, and for several months I have managed to avoid charging anything on a card. I have about $150,000 in an annuity-stock account for retirement. It's not much, I know, for someone over 50. The $150,000 grows slowly, while the credit card rate is almost 15%. Would it be a poor choice to use some of my retirement fund to pay off my debts? I'm hesitant about touching my retirement fund, even though I intend to work as long as I am healthy.
-- David

Dear David,
Thanks for writing. Let's put your situation in a broader context. Intending to work forever in a fulfilling job is not just good, it's great. But the reality is that this decision isn't necessarily up to you in today's employment market. Besides illness, there are at least a dozen other things that may, or will, end your career prematurely.

Because you are in the over-50 crowd, it is important to get your unsecured debt paid down and, most importantly, learn how to stop using credit to extend your income. Why? Well, you touch on the main reason in your letter: You intend to work as long as you are able. Once you reach a certain age, you need to be prepared for when you won't be able to work. Building a safety net of retirement funds and emergency savings takes on added urgency.

I completely understand your desire to dump your $17,000 in credit card debt. Almost all of us would be uncomfortable with that level of debt. But I urge you to imagine being hit with a real emergency, and then think about what you'd need to get through it. What if you had a stroke or heart attack, got laid off or went through a divorce? In extreme situations, having a savings safety net is much better than being debt-free. So, keep the retirement savings and add to it.

Next, continue to avoid charging things on your credit card.

Instead of draining your retirement account, shop around for a credit card with an interest rate of 9% or less and low balance-transfer fees. If you are successful, you will need to make a monthly payment of $540 to be debt-free in three years -- that should be your goal. By becoming debt-free and adding to savings, you'll be better prepared for whatever life throws your way.

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