Hi ... approaching the runway ... looking for feedback!

[albireo13]

I'm 61yo engineer with good salary. My wife is 57 with good salary. Problem is she is burning herself out working overtime trying to pay off debt and save more for son's college. I am thinking she is over-reacting and we are close to FI.

me:
$948K lump sum assets (401K, IRA, older pension)

her:
$842K lump sum assets (403B, pension plan, HSA)

expected retirement monthly income:
$2400/mo (my current pension annuity plan)
$5800/mo (combined SS if we both wait until FRA)

Debt:
$347K (mortgage, 30y fixed at 3.625% - $110K equity)
$8K (car loan, 2%)
$5K (CC debt)

Goals:
wife wants to save up $20K for son's college, before retiring
I am itching to semi-retire or retire soon

A few questions ....
1. Does it make sense to clobber our short-term debt using my 401K assets?

2. When does it make sense to pay off the house?
We could dip into my 401K,IRA to kill the mortgage. Maybe not make sense numbers-wise but, it would be an emotional relief.

Thanks.

[Another Reader]

In your shoes, there is no way I would rob my retirement funds to pay off the debt, especially short term debt. The fact that you have credit card debt and are thinking about doing this speaks volumes about your spending and your cash flow.

The first thing I would do is track the spending. Personal Capital or Mint are good places to start. Until you know what you spend now and will spend on things like college, replacement vehicles, a new roof, etc. in the future, you have no way of knowing if you are ready to retire.

I would pay off the credit card ASAP, especially if the interest rate is high.

[pb4uski]

You asked the same question in another thread... the answer is no.... suck it up and get over the "emotional relief" part... the taxes on retirement fund withdrawals to pay off the mortgage would make it unwise.

How much do you need to live on? Have you run your numbers through Firecalc?

It looks like if your spending, excluding mortgage payments, is less than $100k a year then you will be fine.

[Another Reader]

Another thing to consider is paying for college. Your son can borrow for college, but you can't borrow for retirement. He can also work summers and if he is a good student, he can work during the school year.

If you and your wife fully fund all your retirement accounts for two or three more years (while paying off all the non-mortgage debt), you will have more of a cushion for yourselves. It will also give you time to examine and adjust your spending according to your priorities. You may find that some of what you are spending currently is either not necessary or does not really contribute to your quality of life. Cutting spending and growing your cushion should make you more comfortable with the decision to retire.

[38Chevy454]

I agree that your wife may be over-reacting, you are in pretty good shape assuming your budget is around $6K/mo. Having $5K credit card debt is dumb, stop the college savings and pay that off ASAP. That CC debt is high cost, likely 18% or more interest rate. Car at 2% let it ride and just pay off per schedule, nothing gained by early payoff at that rate.

Don't take the penalty to pay off debt using 401K funds. You will pay 10% penalty plus the max tax rate you are at (I think that will be 25% marginal rate fed plus whatever your state has). So that is also not good.

Put son to work, no reason he needs a free ride. I worked my way through with a J-O-B scholarship that was 25 hours/week during school and full time summers and breaks. Son can also get loans and then you can help pay them down some later with 401k withdrawals if you want, at a lower tax rate hopefully.

Or you can retire and let wife keep working, half income should still meet your expenses, once you pay off the CC debt.

[ivinsfan]

How'd you get this CC debt? That's a big red flag...

Just looked at your pay off the house thread and see you have 29 years left on that house payment. You downsized from a much bigger house and at 61 only had a little over 20% down. This doesn't make much sense, at 61 you had only 110K in lifetime home equity? Frankly, if you want to ER you probably bought too much house.

[albireo13]

Yup, too big a house but, we had a few family crises with kids which diverted a bunch of our potential savings.
It's good to get out from under the big house. plan to have the CC paid off in a few months.

[aida2003]

I agree with others that the CC debt *must* go ASAP. If you say you both have good salaries I don't see how you wouldn't be able to 'kill' it withing 3-6 months maximum unless you have some serious cash flow issues you didn't voice like perhaps high health insurance premiums or medical bills (of that nature).

It depends on your expenses whether you need to work longer or quit soon.

[Gumby]

It's hard to speak to your situation without knowing what your spending is.