I am 72 years old and had to stop working three months ago.

Total retirement income is 3200.00 a month. I am paying most of that to credit cards, mine and my wife's. Also have a 712.00 house payment. I have about 4500 in savings but have been taking withdrawals to get buy. I have 112,000 in an IRA, and am wondering if I should take out enough to pay off about 20,000 in credit card debt, or or take about 600 a month to get by.

Some of the cards are high interest, like 26%. This is making my retirement not so happy. Can you advise please?

  • The IRS will penalize you if you don't start withdrawing from IRA accounts after reaching 70.5 y/o. So you might be better off taking some IRA amounts.
    – doug
    Commented Aug 25, 2016 at 17:23
  • @doug nitpick: the dreaded RMD (Required Minimum Distribution) applies to traditional IRA (and 401K), but not to Roth. Q does not specify, but someone 72 today probably was saving in years before Roth became an option. Commented Sep 11, 2016 at 1:00

3 Answers 3


What would you say to a young person who was thinking about getting their first credit card?

Step 1: Cut up your credit cards.

Your first priority is food, clothing and shelter. I'd thrown in medical as well. Attempt to save an appropriate amount to cover medical each month for the year and of course any Medicare supplement insurance.

Although expensive, I'd recommend long term care insurance next. The last thing you want is to go into a nursing home, burn through your 401K, and leave your wife destitute.

If there is any money left over save it for debt settlement. Quit paying your credit cards.

The companies will start calling. If you have $500 and you owe them $4,000 offer to settle for the $500. If they yell at you, hang up.

Only send payment if they state, in writing, that the debt is settled. DO NOT give them access to your checking account. Send a cashier's check or use a prepaid visa. If using the visa, never use it again. Save those letters!

Be sure to explain your woes to the collectors. I would not mention my 401K.

You may want to seek financial counciling about your situation. Many churches or civic centers do so for free. What caused you to spend so much more money then you make? Why did you save so little for retirement? You allowed yourself to be charged 26% interest, why? These questions are tough to answer because they have a behavoir component in addition to a math component.

Good luck to you.

  • 1
    If OP was 30 years old I'm guessing you wouldn't be suggesting this course of action. I think it would be helpful to explain why you think hurting one's credit is a good idea in this case.
    – TTT
    Commented Aug 22, 2016 at 21:07
  • Its kind of a coin flip here. If a 30 year old is no longer to earn money what is the harm in hurting ones credit. However, this family is no longer able to earn and has a statistically shorter time on this earth. Credit is the least of his concerns. To me the most important thing to guard against is health costs.
    – Pete B.
    Commented Aug 22, 2016 at 23:42

The best advice I got for reducing my debt is to stop using my credit cards. Instead, I focused on budgeting my income and tracking every expense. This simple advice has made all the difference and I am extremely close to being debt free.


The simple math is that if you are paying 26% on credit cards, you are almost surely not getting 26% on your 401k, so it makes sense to withdraw from the 401k to pay off the credit cards. There's the catch that if you withdraw from the 401k all at once, that's going to make your income for the year look very high, and you'll pay a higher tax rate. You might want to spread it over a couple of years. I don't know the exact amount of your debt so I can't do the calculation.

If you are still running up debt on those credit cards, the real problem is that you need to stop. $3200 is not a lot but I'd think it would be enough to get by. How long until you pay off that mortgage?

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