Author Topic: Dip in to retirement to pay off Cc?  (Read 1894 times)

albireo13

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Dip in to retirement to pay off Cc?
« on: April 17, 2017, 03:58:31 AM »
Due to a bad last year, I ran up CC debt of $14k, at 9%.

I am 61 yo.

Combined stash of wife and I are $1.4M.
I want to retire in 2-3yrs. 

I am thinking of pulling some IRA to pay off the CC.  To me it seems to make sense but, I just don't
feel right about touching my retirement funds.

Opinions?

Monkey Uncle

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Re: Dip in to retirement to pay off Cc?
« Reply #1 on: April 17, 2017, 04:35:25 AM »
Due to a bad last year, I ran up CC debt of $14k, at 9%.

I am 61 yo.

Combined stash of wife and I are $1.4M.
I want to retire in 2-3yrs. 

I am thinking of pulling some IRA to pay off the CC.  To me it seems to make sense but, I just don't
feel right about touching my retirement funds.

Opinions?

Traditional IRA or Roth?  What is the expected return of the investment that you would be liquidating?  If it's in a Roth, and there's a good chance the return over the time period it would otherwise take to pay off the CC will be <9%, I'd pull the funds and pay off the CC.

ShoulderThingThatGoesUp

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Re: Dip in to retirement to pay off Cc?
« Reply #2 on: April 17, 2017, 05:24:17 AM »
How much can you put towards it a month without dipping in to retirement?

How do you prevent this from happening again?

Cranky

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Re: Dip in to retirement to pay off Cc?
« Reply #3 on: April 17, 2017, 05:44:10 AM »
It all depends - why were you $14k short?

I'd take it as a sign to up the emergency account, for one thing. If it was really for something necessary, I'd probably just pay it off and make sure that I could cover that in the future.

If it was dumb stuff, I'd make myself pay it off out of current funds, and remind myself every month not to be dumb.

Heroes821

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Re: Dip in to retirement to pay off Cc?
« Reply #4 on: April 17, 2017, 08:22:40 AM »
With a stash of 1.4 mil why did you put anything on the CC?  Is your wife significantly younger than you? You should be FIRE'd already and if so you shouldn't need to be running up a CC.

Like others have said, this might mean you need to increase your cash emergency fund.  Personally if your spending is controlled and SS starts at 62 why not just work 1 more year and then retire?

Mother Fussbudget

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Re: Dip in to retirement to pay off Cc?
« Reply #5 on: April 17, 2017, 10:24:13 AM »
1. Pay off the CC balance.  Use your EF, or snowball it if you can.  If you have a 401k, consider taking a 401K loan @ 4% to pay it off - the interest on 401K loans goes directly back to your 401K.  Or pull money from your 401K without a loan.  You're over 55 so are eligible for the 'rule-of-55', and can withdraw money from a 401K without penalty at any time. Pull money out of IRA/Roth as a last resort.
2. Read "Get What's Yours" by Laurence Kotlikoff regarding Social Security - don't assume you need to take SS at 62 if you're in good health, and otherwise ready to 'FIRE'.  He has another book on Medicare (2 books).  Use your library for this.  www.getwhatsyours.org
3. Consider submitting a full "Case Study" in the case study forum.  Even if you don't publish the Case Study data on the forum, it will probably be helpful.
4. Re-read the "Investment Order" recommendations, and see how it matches your situation.

I focus on helping those (like myself) working on 'not-so-early' Early Retirement.  If you begin to think of yourself as in 'Pre-Tirement', it might be a helpful mindset shift.  All the best. 

albireo13

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Re: Dip in to retirement to pay off Cc?
« Reply #6 on: April 17, 2017, 11:41:10 AM »
I will put a case study together shortly and post it ... tomorrow probably.

Sold/bought house last year ... underestimated moving costs and work on new house.  No cash reserves so, a bunch went on CC.
Also, my car dies 2 years before I had hoped and took out small loan to replace it with a used.
Actually I just checked and CC is up to 10.15% now.

Need to build up a cash reserves to avoid this happening again but, paying down debt is getting in the way of doing this.

I could probably put $1200/mo towards it right now.

It would be a tIRA I would use to pay it off.