I sold my house, took profits and paid off a waterfront lot on the bay. Question for you Aldeer experts. Would I be better off using my 401k $$$ to build my new house, which will cost every bit of my 401k? Should I pull out about $15,000 a year to help make those house payments? My monthly pension will make the payments, but not leave enough to have extras like vacations, new vehicles etc... If I finance $350,000 for 30 years, I would be paying over a million total, but paying it off seems financially smarter. What say you?

Are you retired?

I think you need to figure out if you can really afford this house.

That's my opinion.

If you are financing $350K for 30 years and paying $1M total, you are paying almost 9% interest! I’ll loan you the $350K for half that.

2 years 5 mos I will be.

How old are you? Age makes a difference in withdrawing from a 401 unless you're paying it back.

How old are you?

You are correct, I was taking a SWAG.

Almost 58

No, you're going to get hammered by taxes

Not doing it until I retire at 60

A 30 year mortgage at 60? Will banks even do that?

Ideally your house would be payed off by retirement and you can use your retirement and pension for good living. Cashing out a retirement to buy a house that you may or may not be able to actually afford for when you are retired doesn’t seem like a good idea to me.

I have a monthly pension that is good, without touching 401k, but not having a mortgage is ideal.

I think I need to talk to a CFP and see what would be best.

I guess depending on how good the pension is- if it will allow you to live the retired life that you want, while still having extra money after having the house paid for by the 401k, go for it.

Unless it's changed, if you are 55 or older you can withdraw from a retirement plan without penalty but you'll have to pay income tax at a much higher bracket. Mortgage rates right now are lower than the rate you could earn on the money in the plan in most cases. No way I would do it unless you know exactly how long you are going to live. Most people reduce their lifestyle a little in retirement just to be on the safe side

Are you in the FRS or a City pension?

and an accountant

In a straight up withdrawal (no repayment to be done) 20% is taken immediately, and paid to the IRS, from whatever amount of the 401 is withdrawn.

If you can draw from your 401k without penalty to pay cash for a house that you are going to live in for retirement then that is a good plan.

Land is not getting any cheaper, especially land that is on the water.

City

I wouldnt touch the 401k unless you absolutely have no choice. You never know what might happen down the road.

IMHO build a cheaper house, leave the 401k alone. You're gonna get hammered on taxes taking a huge lump sum amount out, losing the advantage of stretching the payout payments out. Hopefully your 401 is making you more $ than mortgage rates are running now. If life throws you a curve ball or when you retire you could pull out 401 $ then.

Only use 1/4 of take home pay for house payment on 15yr fixed.if pension is only take home pay an u can t do that then u can’t afford house. Too much risk for me to clean out 401k.If your 401k is invested in good mutual funds that average 10 percent a yr u will have 825k when u get 67 an u can afford pay off house without cleaning out 401k. Or u can just take interest every yr to help make payments. But your never know bout stock market. I know a payed for house is a great feeling but I would not clean out my 401 to do it.if u was younger an had time to build back 401 k it would be better if u didn t have pay a penalty just taxes.just my opinion.

Borrow the money , then you are worth twice as much

I would finance it, its likely that you won't live to pay off the loan and your family can then use your 401k to pay it off.

Just pull it all when the getting is good and pay the taxes.

Or just sell it.
Leave the money in your retirement, so it's making some money. Can't make money on money that's not there.

Yes.

I hope you are not planning on taking a lump sum on your pension if the city allows you to do so.

I’d draw enough to make payments,no way I’d clean out my 401

No way I would put that much $ into a house and debt at your age!

I'd build a cheaper house. Way cheaper.

Not sure what I would do but I can tell you for sure what I would not do. I would not touch my 401k and I would not build a house that would take me 30 years to payoff.

My pension is a set amount monthly for life with COLA built in, 401k is just my DROP money.

Have to build 2200 SF minimum for neighborhood and builders are charging anywhere from $165-$250 per sf to build. I will probably become the GC and sub it out and save about 25%

I'd buy me a few acres in the wilderness and build WTF I wanted for a LOT less per sqft.

No way would I wipe out my retirement savings (401k) to build that much house even if I had a good pension. I'd build a less expensive house somewhere else.

Is this thread real life? Nobody with any common sense would do this. You lose so much money if you pull it out of your 401K over the next 7 years.

Let's hope nothing every happens with your pension.

Absolutely. Houses often aren't the glorious investments they're usually made out to be.

You can start drawing 59 and a half penalty free. I would wait until then and look at paying enough of the mortage to at least get the PMI off. Thats wasted money. No one should ever pay PMI with the exception of there first mortgage.

If you decision is already made I would just make payments with the balance. If you draw a large amount out at one I assume it could put you at a higher tax rate for that year.

A mortgage, period, at age 60 is a scary thought. I know tons of people do it, but when do folks plan on paying off their debt?

You are going to need that 401K to pay the HOA dues.

Nope. Don't do it. House payments should be gone by retirement.

........and your lawyer when you park your pickup on jack stands .

Only if you can't afford it. Let's say you are 60 and you are drawing 6k-7k a month in retirement and you have no outstanding debt. You decide to buy a vacation home with a morgatge payment of under 1,000 a month or so insurance and all what would be wrong with that. It is only if you can't afford it when it becomes a problem.

When I moved here and bought a house at 57, I took out a 30 year mortgage. I did have a large down payment from the sale of my Texas home. My house payment (including escrow) is $700 a month. Can't rent an apartment for that amount.

I'm not ever going to "draw" anything. I have to view these type decisions through the lens of what I have in the bank, and will have saved over decades. Pensions are dead for people my age.

I guess if you have an ironclad pension, you can do whatever you want, and you'll be fine.

I do. I also do not plan to save everything I can, to leave it to my children. My FIL has worked hard his entire life and spends less than what is coming in from investments every year, and is too feeble to enjoy it now. I am sure we will be getting enough from him, to live comfortably, without needing any of his $$$. I want to LIVE and enjoy retirement and living on the bay is a life long dream. If something happens to me first, my wife gets 75% of my pension. I paid 11% into my pension my entire career, for one of the best pensions in the State.

I would just borrow for the house. Later on down the line after you see how things go in retirement you can always pay it off early. I like the rest of your plan. There's nothing wrong with having a mortgage at retirement as long as you can pay for it and it sounds like you can. If you die before it's paid off it gets sold and with waterfront property it is hard to lose money.

Dear Lord, I'm glad I ain't looking at a 30 year mortgage and I'm just 50.

Yeah, when people get to 50 they should be in their final years of mortgage payoff, not starting a new one.

That is something that hurt a lot of people in their 50s to 70s the last Great Recession - they went crazy in the bubbling real estate market,
bought newer bigger more expensive houses or bought new second vacation houses.....and then the bubble popped. And financially wiped out millions of people
who were at an age where they should be at or near a mortgage free and debt free time of life - not losing their life savings.

You don't want to be using your retirement funds to pay mortgage debt.

Your supposed to be using it to take it a little easy, see the world, travel, go do some international mission work, stock up on more ammo - and get prepped for any civil war and end of the world scenarios.

Your pension sounds similar to the FRS which I retired from. I took their option 3. If something happens to me, my wife will get 100% of my pension. The only draw back was I took a hit when I retired due to her being three years younger than me. I get a yearly cola raise every year and I get the health insurance subsidy from the State. I bring home more now than when I was working minus my health insurance.