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Old 02-27-2013, 05:30 PM   #1
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I turn 55 this year and I'm thinking about retirement I have no bills other than two houses and one car I have enough money in my 401k to pay off one house and car I'm concern about how I will be tax I do qualify for the rule of 55 I'm military retire and also my Wife will retire in 7 years and at that time we plan to pay off the other house if not earlier. Just want to know if there's anyone out there that have been down this road. Thank you!!
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Old 02-27-2013, 07:34 PM   #2
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Quote:
Originally Posted by kennjj View Post
I turn 55 this year and I'm thinking about retirement I have no bills other than two houses and one car I have enough money in my 401k to pay off one house and car I'm concern about how I will be tax I do qualify for the rule of 55 I'm military retire and also my Wife will retire in 7 years and at that time we plan to pay off the other house if not earlier. Just want to know if there's anyone out there that have been down this road. Thank you!!

Well for one thing you probably should tell us what state you live in. Some states tax pensions. Some states give some expemption to a portion of the pension. Other states are income tax free. Are you active military? Are you reserve/guard? If reserve/guard did you do federal employee and have that as a pension too? Your 401k is it in TSP? Are you still contributing?

You can add more and others will chime in here too. You just didnt give us enough information. There are some very smart people here with lots of experience
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Old 02-28-2013, 01:02 PM   #3
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Does your 401k let you pull out money before 59.5? (Some do, some don't). If not, you can't use those funds to pay off the house/cars without paying an additional 10% penalty.

What is your budget? Does the pension cover your budget? If not, what source of money will you use to cover your expenses?

And as mentioned - taxes. States have different rules on what is taxable at the state level.
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Old 02-28-2013, 03:27 PM   #4
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Quote:
Originally Posted by kennjj View Post
I turn 55 this year and I'm thinking about retirement I have no bills other than two houses and one car I have enough money in my 401k to pay off one house and car I'm concern about how I will be tax I do qualify for the rule of 55 I'm military retire and also my Wife will retire in 7 years and at that time we plan to pay off the other house if not earlier. Just want to know if there's anyone out there that have been down this road. Thank you!!
The issue you need to address is what sources will provide you with what you need to live on between 55 and 59.5. IF your 401lk plan allows penalty free withdrawals if your retire after 55 then that would be good.

Have you used Quicken Lifetime Planner or Firecalc or some similar tool to provide a projection of your situation?

Not a lot to go on.
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Old 02-28-2013, 05:47 PM   #5
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I have not been down this road but just wanted to welcome you aboard.
Quote:
Originally Posted by kennjj View Post
I turn 55 this year and I'm thinking about retirement I have no bills other than two houses and one car I have enough money in my 401k to pay off one house and car I'm concern about how I will be tax I do qualify for the rule of 55 I'm military retire and also my Wife will retire in 7 years and at that time we plan to pay off the other house if not earlier. Just want to know if there's anyone out there that have been down this road. Thank you!!
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Old 03-04-2013, 10:42 AM   #6
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Old 03-04-2013, 12:04 PM   #7
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Old 03-05-2013, 10:58 PM   #8
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Originally Posted by kennjj View Post
I turn 55 this year and I'm thinking about retirement I have no bills other than two houses and one car I have enough money in my 401k to pay off one house and car I'm concern about how I will be tax I do qualify for the rule of 55 I'm military retire and also my Wife will retire in 7 years and at that time we plan to pay off the other house if not earlier. Just want to know if there's anyone out there that have been down this road. Thank you!!
Thank you for your service? You asked if anyone has been down this road before and got no answers so far. That is probably because most of us posting on this forum are early retired or working towards early retirement. To retire early you generally need to live below your means and save enough to live on in retirement. If you are collecting a military retirement and two pay checks and have more debt than savings then you are definitely not living below your means and will need to cut way back on spending to save enough before retrement or be forced to cut back even further in retirement. If I was you I would track expenses to see where the money is going and then come up with a plan to cut expenses and save enough so that a combination of savings and your military pension and SS will cover your expenses in retirement. If you are planning to draw money out of the 401K to pay off your debts you will need to consider the tax consequences. If you will be in a lower tax bracket after retirement it might be better to wait until then and space out withdrawals over several years.
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