I’m 60 and have $1 million in my retirement accounts. My house needs a new roof. Should I use my savings to cover the repairs?

Expensive MarketWatch,

I’m single and personal a house on which I’ve deferred repairs, akin to a brand new roof and an upgraded electrical system. The home was in-built 1925, and the prior home-owner reworked however didn’t hassle with {the electrical} improve. 

I wish to get photo voltaic put in, however that requires a large improve to {the electrical}.  As I’m now 60 and nonetheless working, and have a bit over $1 million saved in my retirement account, I don’t know if I ought to withdraw among the cash and deal with the wanted repairs.

I’m nonetheless working however at a job that pays me far lower than I used to make, so having the ability to afford the repairs would require the withdrawal. I intend to work till I’m at the very least 67.  My mortgage can be for one more 10 years after I retire. 

With all of the work I must have performed on the home, I’m assuming I could need to put upwards of $100,000 into my house.  The home is price $700,000 within the present market.  Do I’ve any alternative?


Repairs vs. Retirement

The Big Move’ is a MarketWatch column wanting on the ins and outs of actual property, from navigating the seek for a brand new house to making use of for a mortgage.

Do you’ve got a query about shopping for or promoting a house? Do you wish to know the place your subsequent transfer needs to be? E mail Jacob Passy at

Expensive Repairs,

These are the costly perils of being a home-owner — and why shopping for a house doesn’t all the time take advantage of monetary sense for everybody. Whereas proudly owning a house presents individuals an opportunity to lock of their housing prices and never want to fret about rising rents, it comes with added duty. Residence enchancment initiatives don’t come low-cost — and don’t essentially provide any form of return on funding, both.

Staring down main repairs like a brand new roof or {an electrical} improve might be daunting, significantly for somebody in your state of affairs who’s counting on a single earnings. And when one has amassed as a lot as you’ve got in financial savings, it’s tempting to wish to fall again on them in troublesome instances.

I need to warning you, although, towards treating your retirement financial savings as a rainy-day fund. Sure, you should patch the holes in your roof to have shelter towards the literal wet days. However you additionally want monetary safety for the figurative wet days sooner or later.

You have got lower than a decade till your deliberate retirement date, which leaves you with not a lot time to rebuild any retirement financial savings you may deplete with such a method, particularly as a result of many retirement accounts have contribution limits.

Plus, you should take into account the most important prices that may include utilizing your retirement funds on this method. Distributions from IRAs and 401(ok)s are taxed as peculiar earnings. That might rapidly put you in the next tax bracket.

“Should you bump your self up from a 12% tax charge to a 22% tax charge, you’re in essence paying the federal government a ten% premium to entry your cash,” stated Brian Schmehil, director of wealth administration at The Mather Group, an impartial wealth administration agency in Chicago. “Additionally, you will lose out on future tax-deferred development of these funds.”

You’ll usually be taxed on cash you withdraw from retirement accounts, and doing so might put you in the next tax bracket.

As a substitute, a greater method can be taking out a house fairness line of credit score or refinancing your mortgage to money out among the fairness you’ve constructed up in an effort to fund these enhancements. You may additionally be capable of take out a building mortgage, given the price and scale of the wanted repairs. Getting a brand new mortgage would go away your retirement funds intact, and with rates of interest as little as they’re now it won’t be too burdensome, setting apart the bills tied to closing prices and utility charges.

Earlier than you go to the difficulty of making use of for a mortgage, take the time to do a monetary self-check. My concern is that you possibly can be in over your head with this house. Proper now, it’s the roof and {the electrical} system. Tomorrow, it might be the plumbing or the central heating. The following day it might be one thing else.

You’re simply years away from being on a hard and fast earnings. Sure, $1 million could seem to be some huge cash to have saved away for retiring, however you’d be shocked how briskly it could possibly go while you issue within the prices of getting older — not even accounting for desirous to spend a few of that cash to get pleasure from your retirement.

It seems like you could be dwelling in one thing of a fixer-upper. Initiatives like these are finest suited for individuals who are younger in age, not simply younger at coronary heart. Take into account whether or not you’ll be able to afford to remain the place you are actually. As a substitute of spending $100,000 on Band-Aids, take into consideration whether or not it could be extra worthwhile to downsize to a smaller, extra inexpensive house that’s in higher form. The time to make such a transfer is while you’re coming from a spot of economic energy, as you appear to be now. | I’m 60 and have $1 million in my retirement accounts. My home wants a brand new roof. Ought to I take advantage of my financial savings to cowl the repairs?


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