I will be 72 in a month. I want to cash in my 401(k) valued at $74K to pay off our $70K mortgage. I currently withdraw $491 monthly and my mortgage payment is $450 per month. I feel I’m robbing Peter to pay Paul. The $491 monthly withdrawal is 11% of principal. I’m watching the principal continue to go down. The difference is $41 a month tax.
The $74k will be added to your annual income and taxed at the new income level.
So, let’s say you’re making $30k from social security, your income the year you make this withdrawal will jump to $104k and you will likely owe the government money for taxes.
A better option may be taking $10k - $15k per year to minimize your tax impact
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