Dave Ramsey- Boomers Ask Dave

Use Pension to Pay Off Debt?

Dear Dave,
I'm 61 years old and just lost my job with the only company for which I've ever worked. I've got $120,000 in my retirement fund, but I owe $57,000 on my home and $8,000 on a car. Should I pay off my debts using my retirement savings?

- Peggy

Dear Peggy,
Your idea makes me a little nervous if this is your only nest egg, because you won't have much money left to live on. You'll have taxes taken out, and depending on your tax bracket that will probably leave you with about $50,000 if you pay everything off.

Now, if you've got another source of income in the home providing $50,000 to $60,000 a year you'd probably be okay. And if that's the case I'd say go for it. Write the checks and get the house and car off your back today!

Just be careful that you don't put yourself in a tight situation. Remember this, Peggy. Money is fun - if you've got some.

- Dave