[Lonasnead]

I own a condo and a mobile home. Mobile was purchased out of fear when my business was lost and was having difficulties finding a job, had received a small, very small, gift from a friend who had passed away. Didn't want to allow those funds to slip through my fingers. Used the funds as a large down on a mobile. It would allow me, a 62 yr old woman, to have a place to live reasonably for what I felt would be the last place I would live in my lifetime. The balance is on a $23K note. Payment of $462 per mo. The lot rent monthly is $350. (with yearly increases of $10). Very decent, clean park with trees etc.

Less than a year later I was hired by a large company with annual salary + commissions of roughly 60K - it varied due to commissions. I purchased a condo, in a distress mode from that owner, in a senior complex with zero down 95K loan - $710 per mo - assoc dues $450 per mo. The dues include all utilities (electric, water, trash and snow removal etc), lawn and pool care, flowers, lobby service, a ton of amenities. I wasn't able to sell the mobile before taking possession of the condo, however was able to rent out the mobile for $550. I currently have credit card debt of just about $5K.

That worked for over 2 years. Then I lost my job due to a general bloodbath about a year ago. It seems my age is definitely against me at this point and at 66-1/2 yrs - jobs paying more than minimum are not seeking me out - though I have beaten all the bushes to the ground and not let grass grow under my feet.

During this past year I have used the majority of my savings - what is left is not even 3 months to cover expenses. I sell on eBay for myself and others so I do have income - not a lot but it helps! I have a small 401K and pension - remember my age - and I didn't have either of those until I worked with the large company. So I'm grateful for them.

I just received notice from my mobile tenants that they will be vacating the end of June.
What direction should I take? My gut feelings say try to sell the condo and move back into the mobile. While it is a step down - at my point in life I'm not proud and need to be totally practical.

Here in is the question - use all of the 401K to pay off the mobile? The funds amount to enough even with less the 20% taxes. The 401K and pension are currently in an IRA at 5-1/2% - both mature in Dec of this year. Would there be a penalty for withdrawing early? I've looked through the docs with no percentage mentioned. Is there a norm? The condos normally don't move in this complex for about 6 months - 1 year (nor do the mobiles - if at all). So even though living in the mobile I would still be paying out every month $1160. Until the condo sells. I don't see any profit coming from the condo - just getting it off my back. Once it's gone I can easily live in the mobile from my social security - and with an hourly job for as long as possible then it shouldn't be so bad. I know I'm better off in many ways than so many people - I just trusted the 60K+ job to last me until the age of 70 to fit into my early pay off the condo mortgage plan.

Leasing the condo would bring $900 - so definitely would still be short every month on covering the mortgage/association dues. Or should I sell the mobile and stay in the condo - hopefully I could work at eBay or hourly for another 10 years. But if any problems arose, i.e. health, vehicle etc, I would be short about $600 a mo.

It seems that either way I have to cash out both of the IRAs in order to survive until the condo is sold. That would pay off mobile, pay off credit card debt (not rivolous spending), and allow me to know that I could still make the payments on condo until its sold - hopefully soon. Thoughts? Thanking you in advance for any suggestions.:confused:

Lesson to the young women out there! Safe for your own future - keep those funds separate from a spouse.

[gazelleintense]

keep those funds separate from a spouse.

Isn't that illegal and dishonest?

Taking out 401k early you must pay taxes AND penalties. Generally not a smart idea.

[gazelleintense]

Keeping separate sounds like hiding to me. Could be taken either way in that content.

[oneguyinohio]

Semantics aside, I think it is wise to have separate credit histories etc for both people in a marriage not for any illegal or unethical purposes, but just to protect people in the long run...

Sounds like you don't have much equity in the condo so if you have to let it go back and mess up your credit you would still have the mobile home. I would save all the assets you can, and not pay off the mobile home either just in case you have to file for bankruptcy protection as the only way of getting out of the debt on the condo...

You have a better chance of keeping the mobile home as your sole residence if it is not completely paid for and you are on good terms with that lender...

I seem to have found this post a bit late, but I would like to hear how things have worked out in your situation??

[beingteri]

Thank you for such a thorough post... but I hope you haven't ran out and liquidated your retirement accounts already. And as for the first responder... you are completely allowed to have separate accounts, nobody mentioned anything about "secretly" hiding accounts from the spouse... MANY MEN ALREADY DO THIS... and it doesn't seem to rub anyone the wrong way!
I don't know where you live or the location of the Mobile home or Condo... but one thing to consider about the Mobile Home... You will be paying a space rental fee that gives you no advantageous tax deductions... just money spent. As well, Mobile homes are generally speaking are depreciating assets. Assuming you did not buy it brand spanking new from the factory, it may age faster than you'd like. There will come a point where you will be unable to get an Equity line of credit if you have an emergency. However, a condo generally gains value over time at a rate similar to that of a freestanding home. This will offer you an avenue to get money if you have an unexpected emergency.
Now, go to AARP's website and research the information there on Reverse Mortgages. It doesn't sound like you plan on leaving the condo to a next of kin, therefore, you are in the perfect position to set up something along those lines. You can remain in the condo for the rest of your life without being required to make a monthly payment. You would only be required to pay the taxes and association dues (which include your insurance costs). You could continue to rent out the Mobile home as long as you wish, and once it is paid off, be able to pocket some of that cash toward your own living expenses. Any costs you incur with the mobile home (including the cost for the rental space) would be tax deductible against any profit you make... including "fixing it up a little" to justify charging more for rent... all this now becomes the cost of doing business! The reverse mortgage will not be effected by your 401k or pension balance and won't include the mobile home, because it is not based on income verification. Instead, it is based on your age (life expectancy) and the equity in the home. However, since the condo was only $90K to begin with the reverse mortgage could really work for you. It doesn't work out as well if you live in areas of high home prices like Calif. Florida, or New York.
As for taking your funds out "early" is all relative. Depending on what type of 401k, like the Roth 401K or Roth IRA accounts - need to be left in there for a minimum of 5 years. You are older than 59 1/2 so you avoid those type of early withdraw penalty... but if you are breaking a CD your penalty is you won't be getting 5.5% they will prorate it to how much earlier than the maturity date you pulled it. The big penalty you need to worry about is the penalty tied to the "type" of Retirement Account you set up, check with your administrator.
Now you mentioned being aware of the 20% tax on withdraw, that is correct for the most part. The administrator will remove Federal (and in some cases State if you request it)taxes and distribute a check for the rest. BUT taking the lump sum could have other catastrophic consequences if you haven't thought it through. Depending on how much there is, and how you file your taxes... you could create a snafu. ALL distributions are counted as regular income. That is, let's say you receive a payment of $1200 from Social Security (which counts as regular income) that's $14,400 annually, and your spouse also receives $1200, that brings you to $28800. Your pension and 401k are invested, but let's say your spouse receives his pension in a monthly payment of $1000. That brings your annual income to $40,800. This does not include any investments you may have that require you claim, interest earned on any accounts, or any annuity payments if you have them. IF you were to liquidate your accounts and this brought in after the withheld amount of $25,000 it would bring your income level for the year to $65,800. IF the mortgage interest on the condo and the mobile home are your only 2 items you have as deductions... you could end up owing a crap load.
Do me one more favor. After checking the above info out, if you haven't liquidated and spent all the retirement money, look into an Equity Indexed Universal Life Ins. Policy. It will allow you to get the same or better interest on the money you put in, it gains value by compounding your interest in your favor, it offers you a life insurance policy (if you are in good health) There are certain riders that will allow you to access the cash value if you do have an emergency or are diagnosed with a terminal illness, and includes riders for Long Term Care with a wide range of covered costs including Home Health Care in home as well as Nursing Home care if you need it. Now you can set a time frame, 10+ years to make it worth your while, where you stop paying in and start collecting out... lifetime payments. If you don't make it to your set payout date and pass away sooner... You leave a very nice chunk of money to your heirs. And by the way, they get it ALL, tax free! Nothing is locked up in probate or held in the estate for taxes like your property would be, or your 401k and pension accounts!
If you have poor health, then look into the Equity Indexed Annuities. They gain interest similar to the life insurance policy, and in some cases (because they are taxed on the way out)you may be able to roll a tax favored account into the annuity without paying the taxes up front. Then when you annuitize it (start receiving your annuity payments)it will be taxed on the amount you receive as you receive it not in a lump some. You may also tie the payments to your life alone for larger payments OR to you and your spouse so they too can have a lifetime of payments.

Wow, this didn't turn out to be the quick answer I was aiming for. I hope though it is information you can still use.