I lost my job and we could not afford our monthly housing expenses, dominated by a first and second mortgage. We had considerable equity and so were not insolvent or upside down. In anticipation of hard times, we had initiated a refi with our bank to reduce our monthly payment so we could weather the storm. The news was replete with stories of homelessness and hardship and we were NOT going to join those ranks. But after losing my job, the bank stopped the process and walked away from the table. It was scary. But after pleading and negotiating, we learned that we would meet the underwriters FHA guidelines using only my wife's income IF we liquidated ALL of our short-term debt, which was dominated by our daughter's tuition expenses and car loan (she commutes to college). Our IRA was our only source of the funds we needed and were aware of the tax/penalty consequences.

So, while I understand completely the arguments for and against the use of retirement savings, I have searched high and low for a better alternative but have found NONE. And for all those blathering idiots that suggest as a worthy alternative "short sales", "bankruptcy" and "loan defaults", NONE of them offers one scintilla of advice as to where me, my wife and two children are to go once we are homeless and have no credit.

And while I believe the IRS should make saving one's home from foreclosure a qualifying event, I believe the IRS penalty is a better alternative than the hardships imposed by the loss of one's home. I'll take this opinion to my grave.

Over the last 10 years rate of return in the stock market has been an average of 2%. With all the finicial scams that take place these days an ordinary investor has no chance, huge regulations are need to help average investors get a leg up.

Comrades- please do not concern yourselves about your "nest egg". The concept is an antiquated capitaistic illusion. Soon, every man, woman, and transgendered individual, at the age of 70, will be provided the very best government-backed retirement plan in the world! Coupled with free healthcare, you will be freed from many of the difficult decisions you make today and would face in the future. This glorious day is fast approching, Comrades. My Allah bless the USSA!

If you are in a severe financial situation, step back and ask yourself if you seriously think you can recover. Most people drain their 401(k) before dropping off into bankruptcy. However, 401(k) assets are safe from bankruptcy. Is it better to drain all resources, then declare bankruptcy & have nothing left for retirement?

Taking money from a 401(k) is a bad idea. It really shouldn't even be a last resource. Most people in bad financial situations don't stop to consider the consequences of tapping their retirement accounts - they just grasp at any hope of redemption instead of facing reality.

I have $10,000 on Discover that I could have paid off instead of losing the $19,000 I did over the last year. I am 62, so no penalty - just the taxes. Oh well, too late now, but if I knew then what I know now, I sure would have done it.

while i agree that it makes no sense to cry over spilt milk, people who get laid off from work and have to spend retirement money to survive need to come up with a plan to never have to be in that position again, or at least severely lessen that risk. How you ask?
Everyone in addition to saving 10% of gross pay for retirement should have another 5% of their gross pay put away to build up a rainy day fund equal to 6-12 months of living expenses and that is not counting any unemployment benefits. That way a family can survive for 12-16 months or so without any income except unemployment benefits and not have to worry about moving under a bridge and living in a cardboard box. Think about that. And adjust your financial lifestyle once you get back to work if you are now out of a job and if you still have a job, immediately implement that saving plan. If that means selling that SUV and buying a 10 year old car, do it. If that means dumping the cable tv, fancy i-phone plan, spendy vacations, dining out, etc., etc.,etc., do it. You will be rewarded with financial security.
The likelyhood of then suffering a real financial calamity falls to a very low level then. Not eliminated, but substantially reduced.
Remember, excuses are like belly buttons...everyone has one.