• Question
  • Paying off debts from IRA

    Asked by a 79 year old man from Tucson, AZ on 6/12/2012

    Should I pay off debts from IRA?

  • Categories: Paying Off Debt, Retirement Planning


  • Steve 


    San Francisco, CA

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  • Hi,

    Generally if the cost of servicing your debts (the interest rate) is higher than the returns you are getting on your investments it can be a good idea to pay down your debt with your savings/investments. However there are several considerations if this is tax qualified savings (ex. IRA or 401k) including:

    - are you younger than 59.5 years old in which case taking money out of your IRA could trigger penalties or higher taxes

    - what kind of debt are you paying off - ex. mortgage interest can be deducted from your income which lowers the effective interest rate

    - are there other strategies you could apply with your IRA savings to generate income in retirement

    You may want to talk to a fee only financial advisor about your options - you can search for advisors here: http://www.newretirement.com/financial-advisor-marketplace.aspx

    Good luck!

  • Login to rate this answer:   Answered on 6/18/2012
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.