Paying off credit cards
Dear Terry – hope my question makes sense. I’m a widow for 4 years, 69 years old. I worked until 66.5 and currently collecting my social security. My husband had a government job most of his life so was just short of his SS credits but had a pension that I benefited from. I rolled my $$ from my employer into an IRA account which over the years I have withdrawn from, having taxes withheld. The balance in my account is roughly $105,000. I also have a mortgage and cc debt of about $9000. Would it be wise to pay off cc debt by withdrawing from the IRA? You probably need more information but wanted to start with this question.
Thank you,
Terry Says
OK, so my first question is HOW is the IRA invested? Are you in a stock market mutual fund, a money market fund, or a combination of both?
My second question revolves around your income tax bracket and your Medicare premium bracket. If you withdraw $9,000 from your IRA it will be considered taxable income –so you’ll need to pay extra taxes in the year you withdraw. And depending on your total income, an extra $9,000 withdrawal could increase your Medicare Part B premiums. The chart at this link will explain when the surcharges start.
OK, all that said, yes, I do think it’s a good idea to pay down that credit card debt. I’m sure it is in double digit interest rate territory, so you’re just digging a deeper hole every month.
One other question: Are you in a position to get maybe a part-time job, even baby-sitting, or helping a senior woman, so you could earn extra money and use it to pay down the card debt??
