There are few things worse than seeing your debt rise after retirement. You might think you’re too old to rejoin the workforce or worry you won’t get hired even if you did apply. Whatever the reason, it’s important not to make this major mistake: paying off your debts with your retirement accounts.

If you’re like most people, you probably worked incredibly hard your entire life, setting aside a sizable chunk of retirement money in the process. It’s tempting to look at that money and see quick relief from your financial burden. Unfortunately, this is not the best option for a majority of people.

This decision could cost you more in the long run…

For many retirees and seniors, medical expenses are a major cause of debt later in life. Unfortunately, as we age, our need for medical care only increases. This means, of course, that even if you pay off your medical debt by dipping into your retirement account, you may incur additional costs later on. What then? Will you dip into your retirement again?

Dipping into a retirement account even once can be a slippery slope that could result in a retiree draining their savings just to pay back their debts. In these cases, retirees are often left without the necessary funds to make ends meet let alone enjoy their retirement.

Bankruptcy may be a better option…

In cases of massive, unexpected debt, sometimes the best option is to consider bankruptcy. While it may seem overwhelming or even a little scary, bankruptcy can provide retirees with the clean slate they need to go back to enjoying their retirement.

You may not lose everything either. Chapter 7 and Chapter 13 bankruptcy both offer property exemptions that will allow you to keep your property instead of liquidating it to pay creditors. Better still, retirement accounts such as traditional individual retirement accounts (IRA) and Roth IRAs may both be exempt in bankruptcy.

The bottom line is this…

While you have the option to pay off your debts with your retirement money, you should seriously consider whether this is the best idea. You need to do what makes sense for you, and you might not be able to realize your better options without speaking to an attorney.