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.