Pay Off Debt or Invest Retirement Funds

READER QUESTION

Should I pay off my debt or save for retirement?

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Bills.com Resident Expert
Dec 12, 2011
BILL'S ANSWER

I agree with your spouse in general, but not about the specifics of his plan.

The interest expense on the credit card is not deductible. Therefore, consider taking a distribution from the retirement account and zero the credit cards as quickly as possible, and then leave them that way. That leave you $85,000 in the retirement account.

You should consider rebuilding the retirement account quickly. You both have adequate income relative to the mortgage expense to allow you to save a large amount each month if you have a handle on your expenses. I urge you to look very closely at your expenses, and create a plan to save at least 10% of your monthly income into the retirement account.

Find a financial planner that you feel compatible with and create a balanced plan for investing the retirement account. With your monthly savings and your investment results you should rebuild this account quickly and given enough time and disciplined savings you can double the size of this account in two years. Then do it again in another thee years.

You do not mention if you have life insurance. Consider getting enough to cover the balance of the mortgage if it is affordable given your ages and health.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/

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