Wu51
New Poster
Cash: $ 0.45
Posts: 2
Joined: 11 Nov 2014
Location: US
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Sorry if I have the wrong thread… mods please move as appropriate.
I am an US citizen, age 63.
My current income is:
Pension - $2217.00
Social Security - $1274.00
IRA*- $660.00
HSA- $60.00
TOTAL GROSS $4151.00 TOTAL NET $3605
*My IRA has a current market value of about $94,000. I am withdrawing from this at about 8% so will deplete in 13 to 15 years… I think.
Here is my problem. I have a $27,000 credit card debt at 11%. Yes stupid but I’m glad I had the credit when I needed it.
The $600 IRA disbursement is a wash. It goes directly to pay the credit card. I can only afford to pay $50 dollars a month over the minimum payment.
Should I take $30,000 (before taxes) out of my IRA and pay off this bill? If I have $64,000 in my IRA and reduce the disbursement to 4% I think I’m money ahead.
I have no prospect of a windfall coming my way and don’t see any other alternative. I don’t own property so I have nothing to secure a loan.
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Tue Nov 11, 2014 6:06 am |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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The answers depend on how you invest inside your IRA. If your $94,000 is in a savings account or a CD it is probably earning only about 1%/yr. If it's in bonds it is earning about 5%/yr. And if it's in a stock index it's been averaging about 11%/yr.
You said that if you sold $30,000 and paid 0ff the loans, you would reduce the disbursement to 4% - but theoretically you could reduce the disbursement to 0%, as you said, it's a wash.
One possibility - if your IRA is in a low interest investment, you could move it. Eg, if your remaining $64,000 were earning 10%/yr it would grow to about $200,000 by age 75.
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Tue Nov 11, 2014 1:39 pm |
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Wu51
New Poster
Cash: $ 0.45
Posts: 2
Joined: 11 Nov 2014
Location: US
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Yes it's in an IRA managed by Raymond James. Bonds mostly with some Non-US equities. Earning 5.54%. I'm going to do exactly as you suggest. I will up my risk and hopefully recoup some. At this point the $64000 is kind of useless as an income source so might as well gambol with it. I guess I just needed a second opinion so thanks a lot for your time and input.
I live in Thailand so don't pay any state taxes but should I take 15k this year and 15k next for IRS purposes?
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Tue Nov 11, 2014 3:17 pm |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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quote:
I live in Thailand so don't pay any state taxes but should I take 15k this year and 15k next for IRS purposes?
Probably. Your $48,000 income plus a $30,000 sale would result in a $78,000 income so you might have to pay income in a higher bracket on the second $15,000. Your idea to split it into two years would prevent that.
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Tue Nov 11, 2014 3:26 pm |
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