By Sheyna Steiner, May 9

Bankrate.com

Despite increasing signs of a stabilizing U.S. economy, 19 percent of Americans — including 17 percent of full-time workers — have been compelled to take money from their retirement savings in the last year to cover urgent financial needs, the Financial Security Index found.

Though 80 percent of full-time workers didn’t dip into retirement funds, far too many consumers are ill-prepared for emergencies, says Kim McGrigg, manager of community and media relations at Money Management International, a credit counseling agency.

“Perhaps the most alarming thing about these numbers is that they suggest a lack of other options,” she says. “Consumers generally consider using retirement funds only as a last resort.”

Michael Masiello, founder of the Masiello & Associates wealth management firm in Rochester, N.Y., agrees. “I believe that 17 percent of full-time workers taking early withdrawals is a higher than normal number, and it’s certainly higher than it should be,” he says.

The potential consequences of tapping retirement funds include early withdrawal fees, taxes and the loss of compound earnings — not to mention the prospect of being unable to retire.

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