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09-09-2017 09:57 PM
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?
09-09-2017 10:06 PM
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,
09-09-2017 10:25 PM - edited 09-09-2017 10:28 PM
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.
09-09-2017 11:27 PM
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.
09-10-2017 10:34 AM
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.
09-10-2017 12:26 PM
@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.
09-10-2017 12:43 PM
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!
09-10-2017 02:26 PM - edited 09-10-2017 04:05 PM
@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!
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