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At your age, you should not have bought a house knowing your income would be cut.
Let me make a few points about that. First of all I didn't know my income would be cut, this was supposed to last for several more years but there was an unexpected budget cut so even though we won't get all of the work done the project is going to end because there's no funding. I could have paid off the house in two years by paying an extra $4,000 a month on the principle because I've been making really good money and have low expenses and that was my plan. Also, when my retirement happened our entire group was surplused and I was fortunate that I was retirement eligible. I do realize the social security situation and know the facts and figures. Also I do have certain specialized skills and it's quite possible that I could land another job like the one I have so if it appears that I don't know what I'm doing or am a poor planner that's really not the case at all.
Let me make a few points about that. First of all I didn't know my income would be cut, this was supposed to last for several more years but there was an unexpected budget cut so even though we won't get all of the work done the project is going to end because there's no funding. I could have paid off the house in two years by paying an extra $4,000 a month on the principle because I've been making really good money and have low expenses and that was my plan. Also, when my retirement happened our entire group was surplused and I was fortunate that I was retirement eligible. I do realize the social security situation and know the facts and figures. Also I do have certain specialized skills and it's quite possible that I could land another job like the one I have so if it appears that I don't know what I'm doing or am a poor planner that's really not the case at all.
Rain falls on saint and sinner alike. No amount of foresight and pre-planning can plan for every contingency.
I am sure that you did as well as you could do. It least you have not lost your home as many have.
Until you can land a higher paying job using your unique skills, lower your monthly expenses would be a good idea. If paying off the mortgage and getting completely out of debt is possible; I would side with that course of action.
At your age, you should not have bought a house knowing your income would be cut.
You're sadly mistaken about Social Security. If you're 59, then you fall into that age group whose official retirement age is 66 years.
Yes, you can draw Social Security benefits beginning at age 62, but you will only draw partial benefits, and you will draw partial benefits for the rest of your life.
Don't think for a moment that you will draw partial benefits and then at age 66 you will automatically begin drawing full benefits, because it won't happen.
THIS IS A PERMANENT REDUCTION if you start drawing benefits at age 62.
I doubt that you have kept current in whatever industry your former employer was involved. You need to be at the library or on-line reviewing professional journals about the health of your industry and your former employer, including the health of your pension plan. Your former employer could collapse leaving your pension plan bankrupt and having dumped your 401(k) into your mortgage, you'd be left with only half of your Social Security benefits for the rest of your life to live on.
I think your retirement was a little premature. You might want to consider going back to work to pay off your mortgage.
No, it's not a permanent reduction. You can start taking SS at 62 and then at your full retirement age, cancel and pay back the money (no interest) and refile up again for full benefits.
Social Security will allow you to take a do-over -- Newsday.com (broken link)
I'll have a few extra thousand by the end of September and I have a valuable guitar that I could sell for at least $20,000 although I really don't want to do that. If I didn't have the mortgage payment and was just living on my pension I think I could save five or six hundred a month. I can really stick to a budget when I need to. Of course the main consideration with retirement is that for the most part your income remains at a fixed rate and there is no adjustment for inflation. Some of my aunts and uncles have lived into their nineties so can you imagine what inflation would do to my current financial situation if I lived another 30 years? That's the difficulty that many aging seniors face and I realize that I'm going to have to plan for that now. I really enjoy the type of work I do and I'm very good at it and being able to do it from your home is also a big plus. If I could even do it part time it pays so well that it would make the future alot more secure.
Getting out of debt is never a bad idea. It might reduce a tax write-off or you might take a hit for one year but you will won't owe a mortgage. So many people in this forum write post after post about how the government and corporations are out to get the little guy. Don't let the tax code manipulate you into staying in debt when you have the money to pay it off.
I would take the peace of mind of not being in debt over savings in taxes any day.
This isn't a political/government issue, it's about maximizing your personal cashflow. In his current situation, and based on our limited knowledge of his situation, paying off the mortgage from the 401k doesn't make financial sense.
No, it's not a permanent reduction. You can start taking SS at 62 and then at your full retirement age, cancel and pay back the money (no interest) and refile up again for full benefits.
Social Security will allow you to take a do-over -- Newsday.com (broken link)
That's true, but for the vast majority of people it's a permanent reduction. The reason is they start drawing Medicare benefits at age 65, and once you start doing that, you can't pay back into Social Security (unless you want to be charged with Medicare fraud).
Let me make a few points about that. First of all I didn't know my income would be cut, this was supposed to last for several more years but there was an unexpected budget cut so even though we won't get all of the work done the project is going to end because there's no funding. I could have paid off the house in two years by paying an extra $4,000 a month on the principle because I've been making really good money and have low expenses and that was my plan.
Consider selling the house and buying a condo, or buying a house you can pay for with cash. That's an alternative to throwing good money after bad and would make you liable for insurance and property taxes, plus maintenance and utilities. You can dump the surplus into your 401(k), a Roth IRA, a money market account, venture capital or better yet, go long on the Euro, especially since a former OPEC member, 2 non-members and 4 associate OPEC members are preparing oil bourses. You should expect the US$ to drop another 14 points over the next 24 months.
Quote:
Originally Posted by MontanaGuy
Also I do have certain specialized skills and it's quite possible that I could land another job like the one I have so if it appears that I don't know what I'm doing or am a poor planner that's really not the case at all.
Hopefully your new job will be more recession-proof than the last one you had.
Consider selling the house and buying a condo, or buying a house you can pay for with cash.
I moved to Tennessee recently because the cost of living is much lower, especially housing prices, but even though it's cheaper here the amount of cash I could pay for a new house would mean living in a dump and that's not something I'm willing to do. The biggest economic mistake I've ever made was when I lived in Seattle for about twenty years I rented all of that time and missed the opportunity of buying a house and making a big profit on it when I moved. I was in my fourties when I bought my first house in Denver and in just seven years I doubled my money when I fixed it up and sold it and transferred to Phoenix. I wouldn't be in this situation if I hadn't wasted money paying rent for all of those years but I guess I'll just have to make the best of it.
I moved to Tennessee recently because the cost of living is much lower, especially housing prices, but even though it's cheaper here the amount of cash I could pay for a new house would mean living in a dump and that's not something I'm willing to do. The biggest economic mistake I've ever made was when I lived in Seattle for about twenty years I rented all of that time and missed the opportunity of buying a house and making a big profit on it when I moved. I was in my fourties when I bought my first house in Denver and in just seven years I doubled my money when I fixed it up and sold it and transferred to Phoenix. I wouldn't be in this situation if I hadn't wasted money paying rent for all of those years but I guess I'll just have to make the best of it.
Better yet having renters pay your mortgage for you, is a good idea too.
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