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Author: Dede108 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308482  
Subject: Credit card debt Date: 9/23/2012 6:53 PM
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I mean by the end of 2013.I have never had this kind of debt so I was shocked when my spouse told me about it.I know what to do and have started.I just wanted to know if it made sense to take less than 10% of my Ira to pay it off.I will be 59 and 1/2 soon.
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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305993 of 308482
Subject: Re: Credit card debt Date: 9/23/2012 7:25 PM
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I just wanted to know if it made sense to take less than 10% of my Ira to pay it off.I will be 59 and 1/2 soon.

If you can wait until you are 59 1/2 to make the IRA withdrawal AND you have sufficient other retirement assets/income, it might be okay.

However, the 'sufficient other retirement assets/income' is the key. If you subscribe to the theory that you need to replace 100% of your current income in retirement (and since you and your spouse have been livng above your means, as evidenced by the credit card debt, I would suggest that for you, 100% replacement is probably a bare minimum), will your current assets and any pension or Social Security you will get provide that?

For instance, if your joint annual income is X, what percent of X will you get from pensions and/or SS? Let's say it's 40%, so the remaining 60% of X needs to come from your retirement assets. A general rule of thumb for a 30 year retirement is that with a 60/40 stock/bond mix you can safely withdraw 4% of your assets the first year, and adjust your withdrawal for inflation after that. A 4% withdrawal means that you should have 25 times the amount that you want for income. So 25 x 60% x X, or 15 times your joint annual income, is what your retirement assests should be AFTER you make the withdrawal to pay off the credit card debt. So, if you can expect 40% of your current joint income will be coming from SS and pensions, will your retirement assets be at least 15 times your joint annual income after you make the withdrawal to pay off the credit card debt? You can substitute your own numbers into this analysis, but if the answer is no, you should not withdraw from your IRA to pay off the credit card debt.

In any case, if you decide to withdraw from your IRA (whether or not it's an idea that passe the analysis above), please do not withdraw from the IRA before you/your spouse have resolved your spending issues and are living within your means. If you do make a withdrawal to pay off the debt prior to resolving the spending issues, you risk running up the debt again, and having fewer IRA assets to pay it off with.

AJ

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305994 of 308482
Subject: Re: Credit card debt Date: 9/23/2012 7:50 PM
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Oh gosh - don't take from your IRA. That money is growing tax-derreed or tax-free, and you will be penalized if you remove it now.

And it's not YOU who needs to fix this, it's WE. Your husband needs to be on board for any of this to work.

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305996 of 308482
Subject: Re: Credit card debt Date: 9/24/2012 3:07 PM
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Yeah! Retiring with low assets is lame!

xtn

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306000 of 308482
Subject: Re: Credit card debt Date: 9/26/2012 8:24 AM
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Retiring with low assets is lame!

But apparently not uncommon.....

According to a Pew Research Center survey in August, while two-thirds of middle-class Americans are satisfied they've saved enough for their golden years, the opposite is true for most people.

There is a link to the survey in the article: http://finance.yahoo.com/news/are-we-saving-enough-to-retire...

AJ

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306001 of 308482
Subject: Re: Credit card debt Date: 9/26/2012 10:46 AM
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___________________ is lame!

But apparently not uncommon.....

True of many things.

xtn

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Author: llamalluv Big funky green star, 20000 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306008 of 308482
Subject: Re: Credit card debt Date: 10/1/2012 9:53 AM
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Have you already pulled credit reports for each of you? The last thing you need is to find out that the debt is really 50% of the value of your retirement savings. :(

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Author: shirehobbit Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306017 of 308482
Subject: Re: Credit card debt Date: 10/6/2012 1:12 PM
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Hi Dede,

If you and your husband are serious about paying off the credit card debt, details would be most helpful.

How much is the cc debt? Is it on more than one credit card? What is the interest rate and amount owed per card?

Is your husband on board with paying off the debt? Can he help pay it off? Regardless of whether he can or can't, is he willing to stop using the credit cards?

Shire

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