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I'm 64 - when should I start to spend my retirement money?

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rubicon1020
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I'm 64 - when should I start to spend my retirement money?  Reply with quote  

I'm 64 and my monthly expenses are currently $1000 more than I make, so I'm getting in additional charge debt every month another $1000. I currently have over $150000 in my IRA and over $50000 in my Roth Ira. I want to start withdrawing $1000 a month, $12,000 a year, to help pay bills and prevent more debt. My wife is totally opposed, she feels, as do most financial advisors, that we should not touch the money, it is there for when we get older, and may need the money for long term care. She'd rather I just keep increasing my debt, try to get 0% credit cards every year to hold down interest, and not touch the money. I feel that I may live another 10 or 20 years, and taking out $12,000 a year there's enough money to last till I die. (I'll start to get $2200 a month SS when I turn 66, plus I plan to seek a reverse mortgage when I'm about 70, so there is future income planned.) My wife by the way has her own retirement fund, about $500,000. I just want to feel free to use my own money before I die - otherwise I'm sure when I die most of that money will still be there - which may be good for my wife, but I think I deserve my money now so I can live more comfortably without the stress of being in debt. Feedback please? (House loan is at 80% so I don't want to refi for a little extra cash and increase my mortgage debt and pay MI)
Post Thu Apr 14, 2016 6:55 pm
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littleroc02us
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What is the total amount of debt you have? Because you and your wife have a total of 700k in investments, which isn't bad, you can take out your contributions from your Roth IRA without tax to pay off the debt. A big reason to do this is let's say your total debt is 30k, the total interest paid yearly is $2,400. After 5 years your paying $12,000 in interest. Just think of the extra disposable income you'd have each month.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Thu Apr 14, 2016 8:29 pm
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rubicon1020
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I totally agree with you, my problem is that my wife is opposed, as is our financial advisor. My wife thinks that I can keep getting zero interest credit cards every year and never have to pay interest. She's concerned that I'll just drain all the money in my retirement fund. She seems opposed to ever using that money for day to day basics,, just so we'll have it if we need expensive end of life medical care. I need advice on how to convince her that, hey, we're in our mid sixties, we're getting in debt, it is ok to start using some of that money. $12,000 a year will not drain the funds before we die in my opinion. Otherwise the stress of being in debt (and arguing with her about this) will likely kill me way before long term medical care is a concern!
Post Thu Apr 14, 2016 9:15 pm
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littleroc02us
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quote:
="rubicon1020" My wife thinks that I can keep getting zero interest credit cards every year and never have to pay interest. She's concerned that I'll just drain all the money in my retirement fund. She seems opposed to ever using that money for day to day basics,, just so we'll have it if we need expensive end of life medical care. I need advice on how to convince her that, hey, we're in our mid sixties, we're getting in debt, it is ok to start using some of that money. $12,000 a year will not drain the funds before we die in my opinion. Otherwise the stress of being in debt (and arguing with her about this) will likely kill me way before long term medical care is a concern!


My response to the credit cards @ zero interest. That's like playing with snakes as Dave Ramsey would say. Eventually that could blow up in your face when you use credit in such a fashion. All it takes is one missed payment and your credit and late fees create unwanted financial issues.

As for end of life medical care, do you have Long term insurance? This covers anything that isn't coverded by Medicare or Medicaid.

Convince your wife? I would sit down with her and ask what her goals are when you fully retire. It can't be to wait and die and not enjoy retirement. If I were in your situation and we could agree on a set goal, then I would devise a plan where you leave a portion of the savings for the purpose of medical care for when that time comes and a portion to live on and live it up a little.

Good luck!

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Fri Apr 15, 2016 2:01 pm
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GardenCat
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I agree with other posts by littleroc...
Credit card games are a losing game. At some point you will be unable to get another 0% card because the card issuers will just refuse you. Also, as you transfer balances there is usually a fee to do that which will be added to your debt.

You are essentially looking at a two year time window to have enough money for positive cash flow, when you can get your social security income. If you can avoid taking your social security until later, age 70, it will gain 8%/yr in payout amount, which can be significant (close to $3000/m payout at age 70 if it is $2,200/m at age 66). If you really need it, for cash flow, for peace of mind, whatever real need, then by all means take it when you reach age 66.

As to your savings, your financial advisor may not want you to take money out of your investments if he/she has any interest in where your money is invested - i.e., the less invested, the less their annual fee is... Be careful there.

Your Roth money, if you use it to get out of debt and to give you balanced monthly cash flow, will not have tax consequences. Your regular IRA money will be counted as taxable income when you withdraw it.

I did serious consumer credit counseling for a number of years, and learned through dealings with many clients that peace of mind about your financial situation is just about equal in importance to how you handle your finances, whether you have not much money of lots of money. If you need to feel like you can sleep better at night, then you need to take the steps to achieve that important goal.

Good Luck!
Post Sat Apr 16, 2016 8:52 pm
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Luke
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rubicon1020: Seems like you are getting the standard advice, which will probably not get you to where you want to be in the time frame set forth. I have advised many investors over the years and you need to do the unconventional/out-of-the-box approach to your net worth. The approach is relatively simple, but cannot simply be addresses via this forum. A few other data points need to be covered prior to accurately plan. You have enough assets to get there, but you need the right plan. If you would like a phone call free of charge with no sales pitch, let me know. Regards, Luke
Post Sun May 01, 2016 10:00 pm
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oldguy
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quote:
$150000 in my IRA and over $50000 in my Roth Ira. I want to start withdrawing $1000 a month, $12,000 a year, to help pay bills and prevent more debt.

My wife by the way has her own retirement fund, about $500,000.

(I'll start to get $2200 a month SS when I turn 66, plus I plan to seek a reverse mortgage when I'm about 70, so there is future income planned.


First, I would forget the Reverse Mortgage, they are a notoriously poor deal - the government is going to extremes to sell them but without much luck. Henry Winkler, Fred Thompson, and other fatherly figures that are supposed to capture your trust, have not been able to sell them, lol.

If your $700,000 is invested mostly in stocks, it probably has a longterm growth of around $70,000/yr. Or, if it is in bonds or other income vehicles, it probably averaging 5%, ie about $35,000/yr.
In about 6 years you will need to start pulling out your RMD, about $25,000/yr, and paying the taxes on it.
So at this point (before RMD) I would pull $12,000/yr from the Roth (that does trigger a tax and it uses only about 1/3 of the $35,000/yr growth.)

Don't try to guess how long you'll live and die broke - instead set it up so that your funds keep growing until the day you die. Eg, if you draw 4%/yr from the $700k but keep it invested in 5%/yr items, it will grow forever.

quote:
, as do most financial advisors, that we should not touch the money


Standard financial planning has led to mediocrity in our society. Over the most recent 25 years, financial advising is all the same - ie, low risk, don't take chances, make sure you don't out-live your money, yada. So - all middle-class wage earners have 2.2 kids, 2 cars, a 3000 ft house with granite countertops - and no one has much actual wealth. Ironically, even the financial advisors are in that same situation - that alone should tell you not to listen to them.
Post Mon May 02, 2016 2:57 pm
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littleroc02us
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quote:
, as do most financial advisors, that we should not touch the money


Standard financial planning has led to mediocrity in our society. Over the most recent 25 years, financial advising is all the same - ie, low risk, don't take chances, make sure you don't out-live your money, yada. So - all middle-class wage earners have 2.2 kids, 2 cars, a 3000 ft house with granite countertops - and no one has much actual wealth. Ironically, even the financial advisors are in that same situation - that alone should tell you not to listen to them.[/quote]

So true, so true. Live modestly. It's so interesting how many of my friends my age complain they will never be able to retire, but I look at their 4,000 to 6,000 square foot houses, new cars, toys galore and nothing saved for wealth.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Tue May 03, 2016 7:22 pm
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