topic Re: Finances and retirement in Community Chat

Finances and retirement

Starpolisher — Sun, 10 Sep 2017 00:59:12 GMT

Dh and I are both retired. Him 3 years and for me 2 years now. We want to have our kitchen remodeled and our roof repaired which does not leak but needs cosmetic repairs. Each cost a substantial amount. We were lucky in that we have pensions and health care. We have a moderate savings account along with our monthly allotments and we also have some investments. Here's my dilemma. Dh feels we should put something down and finance the rest. This would mean making payments and taking money away from our monthly living expense or using money from our savings. I thought when we retired we'd take the money from our investments,TAKE THE HIT ON TAXES and pay cash, which he does not want to do. I don't know what to do. I didn't mind having monthly payments when we were working but I really don't want them now. On the other hand, I know we may need the investment money down the road. I know there are retirees who remodel their homes. Which is the best way to do it?

Re: Finances and retirement

Kachina624 — Sun, 10 Sep 2017 01:03:11 GMT

Perhaps you need to enlist the services of a financial advisor, in case you don't already have one.

Re: Finances and retirement

FrostyBabe1 — Sun, 10 Sep 2017 01:03:53 GMT

The best thing to do is to talk to your financial advisor about how to handle this.

Re: Finances and retirement

libbyannE — Sun, 10 Sep 2017 01:16:30 GMT

There are too many variables for anyone to be able to give you a good answer. You need to sit down with your accountant, attorney, or financial advisor – but not a financial advisor who is in the business to sell you something! – to go over your situation in detail and make that recommendation. There's no single answer. We were fortunate with our careers and investments and saved consistently from age 30, so we've paid cash for everything for a very long time. Personally, I would pay cash, tailoring my plans to suit the amount of cash I wanted to spend! But that's me. Your situation may be different.

Re: Finances and retirement

KentuckyWoman — Sun, 10 Sep 2017 01:25:54 GMT

I retired seven years ago and wanted to remodel our bathroom and kitchen. I had enough money in my personal savings to pay for the bathroom remodel. Four years ago, we decided to remodel our kitchen, add a laundry room to the first floor and replace our deck. I wanted to pay cash. Husband said no way. Financial adviser agreed with my husband so we took out a home equity loan. Our home was paid off about 12 years before I retired and not having that payment was wonderful. We both have SS and pensions as well as savings from both our 401k's and some investments. The taxes would have killed us if we had paid cash from our savings and it would take a long time to make up the hit to our savings. Anyway, that's what worked for us.

Re: Finances and retirement

Carmie — Sun, 10 Sep 2017 01:18:29 GMT

Our financial advisor has advised us to finance and not take money from our retirement savings. He suggests that a home equity loan is the best way and we could use the interest to write off on our taxes.

Every time we do a sit down with him, he bugs us to borrow from a home equity account, even though we don't have a need to borrow for. He says we are paying too much for taxes.

Your case might be different, but you will get a big hit on taxes if you take out a substantial amount out of your savings and you have no way to make it up again. You might have a long time to live and you don't want your money to run out.

At least with a loan, you know you will pay it back.

Re: Finances and retirement

Sadiesadie — Sun, 10 Sep 2017 01:24:08 GMT

@Starpolisher wrote:
Dh and I are both retired. Him 3 years and for me 2 years now. We want to have our kitchen remodeled and our roof repaired which does not leak but needs cosmetic repairs. Each cost a substantial amount. We were lucky in that we have pensions and health care. We have a moderate savings account along with our monthly allotments and we also have some investments. Here's my dilemma. Dh feels we should put something down and finance the rest. This would mean making payments and taking money away from our monthly living expense or using money from our savings. I thought when we retired we'd take the money from our investments,TAKE THE HIT ON TAXES and pay cash, which he does not want to do. I don't know what to do. I didn't mind having monthly payments when we were working but I really don't want them now. On the other hand, I know we may need the investment money down the road. I know there are retirees who remodel their homes. Which is the best way to do it?

You have to be careful with financial advisors. Shop VERY carefully for one. They are not all created equal or trust worthy.

There is a saying that no one cares about your money as much as you do. We learned that the hard way years ago.

I personally would wait on the cosmetic stuff. I know you want to do it but waiting won't cost you anything and money you spend is money gone no matter how you figure it.

My husband has always had savings accounts for various expenses he sees coming down the road. As soon as we bought our Prius, cash, in 2010, he began saving again for our next car 10 years down the road so we could pay cash again or only take out a very small loan.

Any money you take from investments is money no longer working for you.

Good luck. Hope you find someone really trust worthy to talk to about this.

Re: Finances and retirement

september — Sun, 10 Sep 2017 01:32:58 GMT

Think this all depends where you live and what the housing market is like there at this time, and where it's going in the future.

I'd say take a home equity loan to finance this, if you know your home is going to soar in value over the next few years.

Re: Finances and retirement

Annabellethecat66 — Sun, 10 Sep 2017 01:44:14 GMT

The people who said you should talk to a financial planner, I think, are right.

That was one of the first things I did when my husband died. My daughter handles everything between the financial planner and the accountants, etc.

You need to have someone help you decide if it's possible for you to make payments, etc. It sounds like you will eventually need to repair things in your house but someone can show you what to do now, how to save for later and so on.

It is worth any money it costs. Often banks have financial planners and they don't charge anything if you have your money with them.

Look into all firms and decide what's best for your family. My advice is to also include whomever you trust (be it son, daughter someone who will be the executor) include them so they know.

When my husband died my daughter was the executor and now she's on all of my accounts so when something happens to me she can have an easier time with all of it.

Re: Finances and retirement

AuntG — Sun, 10 Sep 2017 01:57:00 GMT

This might be a little simplistic, but if your investments have a better interest rate than the finance charges, then I'd finance and let my investments keep earning interest.

Re: Finances and retirement

magicmoodz — Sun, 10 Sep 2017 01:57:02 GMT

It amazes me how some people put blind faith in a financial advisor. As if s/he will recommend you sell off investments if it means their piece of the pie will shrink. Please think about that.

I have always been most comfortable paying cash for home improvements, automobiles and aggressively paying off a mortgage. I choose to live debt-free for piece of mind. Others choose to live off of borrowed money. What makes you most comfortable?

Re: Finances and retirement

Mom2Dogs — Sun, 10 Sep 2017 02:06:42 GMT

We have a great financial planner, we have been talking retirement for several years and it is plotted out for us. We might retire/sell our business next year, but as far as taking money from our investments...

Along with our updated budget that we do every year, unexpected household expenses are part of the plan, so if we need to do something like new roof, appliances it is all ready figured into our plan.

When DH purchased his new car we thought we would pay cash but were advised to take a draw from our investments, once they explained it, it made perfect sense.

I also advise having a good financial planner, they have been a big help to us and when we do retire we will know exactly how much money we will have to live on, the one thing we cannot control is our health. Well we can control it to a certain extent but as far as having enough money for a long nursing home stay or a huge medical bill we could be in a bit of trouble,

Re: Finances and retirement

patbz — Sun, 10 Sep 2017 02:20:26 GMT

Momtodogs: If you are not 60 yet (price goes way up after that) have you considered some form of Long term Care Insurance?

Re: Finances and retirement

Evie2004 — Sun, 10 Sep 2017 02:28:32 GMT

@Starpolisher wrote:
Dh and I are both retired. Him 3 years and for me 2 years now. We want to have our kitchen remodeled and our roof repaired which does not leak but needs cosmetic repairs. Each cost a substantial amount. We were lucky in that we have pensions and health care. We have a moderate savings account along with our monthly allotments and we also have some investments. Here's my dilemma. Dh feels we should put something down and finance the rest. This would mean making payments and taking money away from our monthly living expense or using money from our savings. I thought when we retired we'd take the money from our investments,TAKE THE HIT ON TAXES and pay cash, which he does not want to do. I don't know what to do. I didn't mind having monthly payments when we were working but I really don't want them now. On the other hand, I know we may need the investment money down the road. I know there are retirees who remodel their homes. Which is the best way to do it?

@Starpolisher, this works for us, we are fortunate to be able to live on our SS amounts..we deposit our quarterly MRD's into our "liquid/ emergency fund" & we have been able to pretty much use that fund for improvements, paying cash for a car since we have retired, not touching our investments.

I also thought, as you do, that we would use our investments for those things, BUT my husband & financial advisor strongly advise NOT doing that..I was out-voted..when we recently had a sit-down with him, I understood why we should not do that. They strongly advise not having a mortgage or line of credit in retirement, if at all possible. Good luck deciding which way to do your remodeling.

Re: Finances and retirement

meem120 — Sun, 10 Sep 2017 03:09:33 GMT

Finance let your savings grow.

Re: Finances and retirement

elruth — Sun, 10 Sep 2017 03:27:01 GMT

Look into a home equity loan. You can get one if you check with the bank and they can advise you. Right now we only pay 1.99 % interest on our home equity loan. After a year it will go up to 3 %. That works out better than taking money out of your IRA's or other investments since you would have to pay federal and state taxes on those withdrawals.

Re: Finances and retirement

Financialgrl — Sun, 10 Sep 2017 14:34:57 GMT

A good financial advisor (fee based fiduciary) should be able to work the best scenario for your situation. Spoke to mine and recommended doing both - but in different scenarios.

Took out a home equity loan when I worked (tax write off) and took money out of a non-retirement account in the stock market when I bought a house recently (and I'm now retired) bc capital gains taxes were so low once my income dropped now that I am in retirement.

Re: Finances and retirement

esmerelda — Sun, 10 Sep 2017 16:26:33 GMT

@Starpolisher I agree with others...a home equity loan. Or better a home equity line of credit. That way you spend what you need when you need it and aren't paying interest on the entire amount if you haven't used it...like you would with a loan where you get the entire amount at once. I think the interest is tax deductible too, the way mortgage interest is.

Re: Finances and retirement

Starpolisher — Sun, 10 Sep 2017 16:43:30 GMT

Thanks everyone for your replies. I really appreciate them! We live on Dh's monthly pension and SS and we deposit mine. We're not old enough yet to get MRD's.(he' 65 and I'm 63) I don't want to get a loan right now because we still have three years left to pay off our two sons' student loans(and that's with increased payments). We don't have a mortgage or car payments and I'd rather pay cash. So it looks like our remodel will have to wait at least another three to five years. Thanks for all your input. It helps to have the perspective of others especially if they have been through it!

Re: Finances and retirement

SeaMaiden — Sun, 10 Sep 2017 20:05:00 GMT

@Starpolisher I retired Three years ago....DH retired just Two months ago. Pension and 401 K. We hired a good financial planner to plan out the next 20 to 30 years. We have allocated In the plan $10,000 a year each year just as extra cash to use as we wish.... towards fixing things....roof, paint, windows etc....improvements or whatever. After Three years we have allocated IF WE CHOOSE $100,000 to spend however we want....which would most likely go to remodeling the house inside.....or moving into a smaller home. Someone else might spend it on a sports car or a world cruise.....not us. We want to fix things in increments and not all at once. What is the hurry?

Our financial planner worked out a schedule so we can draw from our retirement funds without losing money.... live comfortably. You pay good money for a financial planner but they keep your investments in check so your money grows as the years go by.

We we have a hybrid life insurance policy on both of us that includes long term care for both of us....expensive, but, without it you could be wiped out! So important to have!