Retirement pay off mortgage or not for Medicare

[rpofnj]

Hello,

I am in my 65 years and have started Medicaid benefits ( paying premium ) but have not started Social security benefits yet. i and my wife (55) don't work anymore.

I have question regarding Social security and medicare benefits.

I have 20k in my 401k and 20k in bank saving account. I have mortgage 40k on my home and don't have any other death. I have stopped working since last two months.

My questions is should i pay off my mortgage (40K ) from taking money out from 401k and bank account? , So, I can qualify for Social Security ( may be more ) and Medicare benefits.

If i apply for medicare now, then i will not qualify because having bank balance of 20k and 20k in 401k account.

Thanks for your input,

 

[Martha]

If you are on medicare, not working and not on social security, what are you living off of? I ask the question because that may affect your medicaid eligibility as well. This is a serious question with a lot of ramifications. I would talk to a real life expert to see what your should do when regarding medicaid planning.

The 401k and the money in the bank are not going to effect your ability to collect social security pr medicare. It does effect your ability to get medicaid.

 

[rpofnj]

Hi Martha, thanks for your reply.

I have just stopped working 2 months ago. So, was leaving on work money till now. however, now leaving retire life but want to make sure Is it worth to pay mortgage off for Medicaid benefits now. otherwise, I will end-up paying $90+ premium and additional health care cost....

I am thinking paying off mortgage will help to not worry for monthly mortgage/interest payment and at the same time it will help to not worry for monthly medical expenses ( since i will qualify for state ( medicaid) benefits )

 

[samclem]

So, what will your sources of monthly income be now that you are retired? Social security? A company pension? Any other monthly checks (annuities, etc)?

I understand your idea of depleting your savings (by paying off your mortgage) so that you'll qualify for Medicaid and maybe other public assistance. Before you do that, take a careful look at your finances. You need to be sure that you'll have enough coming in every month to pay your bills. Right now you've got a helpful cushion of cash and investments that gives you some time and some options. Once you spend that cash (paying off your mortgage, buying an annuity, etc) you can't easily get a lump sum of cash again at this point in your life. There may be other things than the mortgage that you could put the money against and still qualify for public assistance--I don't know much about those things.

Do a monthly budget first and work through your options before doing anything with that money.

 

[rpofnj]

My source of monthly income will be social security and anything can be as public assistance. - i don't have any other death besides mortgage. i will get some monthly expenses help from kids ( at some level, they're very kind )

I have 30 year loan, paid for 10 years, 40K outstanding balance, and 6.625 interest rate,

If i don't pay off mortgage now, then I will run out of money in 4 years by paying 800+/month mortgage and still mortgage will be outstanding for next is 16 years. And, i will also end-up for not qualify for Medicaid benefits.

So, hoping to pay off mortgage and get Medicaid and any other benefits available.

Certainly, monthly budget first and work through all options before doing anything will help. Thanks,

 

[samclem]

Something's not adding up regarding your mortgage. If it is a fixed rate of 6.625% and you have 20 years and $40K left to pay on a 30 year loan, then you borrowed approximately $48k 10 years ago. The principal and interest payment on that loan is only $307 per month.

If you are paying $800 per month to your mortgage company, then almost $500 of that must be for the escrow account that pays your property taxes (probably the largest part of that $500) and the property insurance (which is going to be a fairly small amount of this). Here's the problem: Even if you take all your money and pay off the mortgage, you'll still need to pay your property taxes and you'll probably want some sort of property insurance.

So, be sure to add the property taxes and the insurance into your numbers when you do your monthly budget. You can't eliminate those bills even if you pay off the mortgage.