Posted on 09/27/2012 9:42:18 AM PDT by Chickensoup
I need some advice. I have a small amnount of money in two different brokarge Ira and rollover accounts. Both monies have been moved to cash assets. Not a lot int there but almost enough to pay off the mortgage.
I cannot access it without penalties until next May, which is when I plan to pay off the mortgage. I worry about that money with the way the world is, it may be a widow's mite, but it is the only thing that will let me payoff and keep my house.
If everything goes bad will the moneis evaporate or will it just not be worth anything. I can pay off with worthless moneis I assume?
I cannot access it without penalties until next May, which is when I plan to pay off the mortgage. I worry about that money with the way the world is, it may be a widow's mite, but it is the only thing that will let me payoff and keep my house.
If everything goes bad will the moneis evaporate or will it just not be worth anything. I can pay off with worthless moneis I assume?
why would anyone pay off a mortgage in a lump sum? unless the interest rate is horrendous, mortgage is probably the
lowest cost money available to regular folk. i’d pay off
higher interest debt first.
It is my only debt.
If your mortgage has a fixed interest rate, a high-inflation, higher interest rate scenario would not be a bad thing. I would not pay mortgage off in lump sum...you'll still need cash for maintenance and property taxes.
I would say that wait until the penalties are not applicable to you.........................
Contrary to #2, if you don’t have other debt, I’d say paying off the mortgage make sense, depending on your situation. If you’re unemployed, retired, or may become such - there’s a big difference between paying a property tax bill and utilities vs. having to pay all that plus a mortgage payment every month. If you’re gainfully employed and feel you will be until the mortgage is paid, then I’d talk with a financial advisor about a way to earn some interest while not taking big risks. YMMV. But there’s something to be said for being debt-free in these uncertain economic times. Good luck.
You may be able to pay off your mortgage with inflated dollars.
That’s what the government is doing......................
damned if you do and damned if you don’t
If you don’t take advantage of these types of accounts, you give up tax benefits. i.e. any money in a rollover that results in cap gains and dividends will result in TAXES if you withdraw and re-invest.
If you leave it in there, there is always some fear that the govt. may change the regs and rape your account.
Personally, I’m leaving everything in there and I’m totally MAXING MY 401K and HSA accounts to reduce my Adjusted Gross Income.
Do what you feel is right.
I’m rolling the dice.
I think the whole thing’s going to come crashing down and all IRAs, etc, will be eviscerated but you might as well just wait, IMO.
In order to answer your question properly one needs to have a complete understanding of your financial situation and prospects.
If you are worried about some near term cataclysmic event, you will have more options if you leave the money liquid.
If your retirement funds are in anything but a Roth, you are going to pay the regular tax on the income which could be 15% to 35%, state income tax - maybe 5%, and then early withdrawal penalty of 10%. Your withdrawal could cost you at least 30%.
If it makes sense to repay your mortgage with retirement funds then at least avoiding the additional 10% penalty by waiting a few months.
In order to maintain liquidity, it might be a good idea to secure a equity line of credit concurrent with the mortgage pay down.
I already withdrew all of my IRA assets for a real estate purchase and put the rest in savings for now. I’m retired but my wife is still working. I am advising her to wait until November 7 and if 0 wins to pull it out. After that I’m not sure so I’m looking forward to the comments you get here. Also, does anybody here have an idea what the tax hit(%) is on the withdrawals? I’m pretty sure I had them take out enough but I’m just curious.
As you mentioned, paying down a debt but I would not take a tax hit to do with an early withdraw; all proceeds are taxed upon withdraw at your current tax rate, therefore you may want to wait until your income drops from retirement....
For myself, I have bought Gold Mining Stocks, and a few Natural Gas oriented stocks and I take a nice profit on dips (so far this year I allowed 23K to become 37K in my traditional IRA and my Roth's play ca$h went from 53K to $69K. I am no longer considering paying down my home, but will allow my capital to grow and use some the dividends/proceeds to be drawn out.
Once your money is gone, so are your options. Keep your options open!
I agree with raycpa in that without a whole lot more information regarding age, expected life expectancy, income realities and the BIG one future events, our input is next to useless. However I did pay mine off (debt free!)and am living on peanuts (Going Galt baby!). I don’t regret my decision. I can’t go out to eat very often or buy some toys I’d like to have but I don’t regret my decision either. It is your decision though because you have to live with the consequences.
How old are you? How much time is left on the mortgage, as it is?
You will have taxable income to report for any IRA accounts (if not ROTHs), and may have penalties for early withdrawals.
Uh, that is already the case. 75% of federal debt is being bought by the FED and the rest by foreign banks. There is essentially no private buying of US Treasuries right now. Some of the FED buys are being done through surrogates to maintain the public fiction that there is any demand for US debt.
If a major player, say a ratings service, came out and said that publicly the house of cards would start coming down. But they won't. Like everyone else, they are scared sh*tless of what would happen. I guess the triggering event will be something else.
You can always pay it in the future. Presuming it is a fixed rate, the payments won't change. You might as well let it ride.
If you are in cash, that money isn't going to evaporate. It may be worth less due to inflation, but your mortgage will will track along with it.
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