2016 financial preparedness

Terry, we’re in a predicament here in how we should prepared for 2016 and need your advice. I am 63 and semi-retired with $330K in retirement and my spouse turning 59 1/2 in January with over $50K in retirement savings and planning to work full time since 66. We are looking at approximately $10K+ in home repairs (new furnace and AC) and another $5K for other general expenditures such as vacations, our son’s wedding, etc. Should we be taking out 4 or 4.5% out of our retirement and sell some stock to take care of the difference or take out the $15K on a home equity loan since the interest is still incredibly low? We still owe $166K on our mortgage at 3.5% for another 12 years in which as it stands today would be done when I am 75 and my wife 71. Thanks in advance for your cherished advice- looking forward to it.

Terry Says:  Well, you are in a predicament — and your predicament is clear to me, but obviously not to you.  I would suggest you can’t afford to retire yet.  I’m not sure why you are semi–retired (for health reasons, or because you lost a job) but you need more income AND more savings in order to truly retire.  I would suggest that you work with a financial planner –a fee only planner –(www.FeeOnly.org)  who could give you some perspective.  Or you could use the retirement planning experts at Fidelity or Vanguard or T. Rowe Price.

But I think they will all tell you the same thing:  You need to earn more money now to take care of those expenses you foresee — everything from the home repairs to the wedding.  AND you need to pay down more of your mortgage, not add to it!