I’m 62 Years Old and Saving Hard for Retirement. What About Our Other Debt? – Michael

“Dear Steve,

I am 62 yo, wife is 61 yo. Our combined stats:
-We have $27k in credit card debt (0% interest, due to finding 12-18 month 0% promotional rates),
-$200k home mortgage using a 5/5 arm at 2.75% which amounts to a $1000/month P&I payment–our property tax in NJ is $1000/month,
-$400k in retirement savings–401k, ira, annuities mostly in stocks and equity mutual funds,
-$11k/month after tax take home pay.
-We contribute about $2500/month to our 401k company accounts.

I want to retire by age 67 and do so entirely debt free if possible. Yet I feel I our retirement accounts are too meager and need some serious bulking out between now and my retirement when my income will be considerably less. What should we do starting now– Pay off all debt asap, including the entire mortgage via accelerated payments but reduce my monthly retirement savings contributions or max out my retirement contributions at the risk of still having either credit card or more likely some remaining mortgage debt to pay off?



Dear Michael,

Thanks for writing in and asking.

One thing is clear, New Jersey property tax rates suck!

I used to live in an are with high property taxes but moved and cut my property tax rates by 75 percent. If you think you might relocate in retirement to lower your expenses then paying off the house fast would not be a priority.

The promotional rate game on the credit cards can only be played for so long. But as long as you can do it I would send at least $1,125 a month towards the cards to have them paid off in two years if you can hold on to the promotional rates.

My fear is you are saving as much as you can in the 401(k) but making just minimum payments on the credit card debt and pushing that problem out into the future.

See also  Should I Keep Investing in My IRA or Pay Off My Home?

If you were closer to retirement and were planning on selling the house I’d suggest continuing to cram the retirement accounts and pay off the credit card debt when you sold the house. Since you are currently five years out it is highly unlikely you will be able to keep the promotional rates for five years.

Does that sound like a reasonable approach?

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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