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www.HowCanIRetire.net
Senior citizens
Plan best for retirement
Save in your Roth IRA account or remortgage your home.
Your home is your castle - money speaks louder than words.
 When you start to get closer to retirement age you have to think about what makes the most sense as far as what to do with any extra money that you are earning or getting in any way.
If you have a home that costs you a respectable amount less than you need to live, should you refinance for a better interest rate?
If your current rate is set at say 6% and you have only 13 years left on a 20 year mortgage then you will have to consider whether today's rates, which are much lower, would pay off for you or should you just stick the money into a Roth account up to the limit per year.
Remember that there is an additional tax to take the money out of the Roth at 10% until you are 59 1/2 years old as it stands today. Read about the Roth in the charts below.
You can reduce the amount of time for the mortgage to pay off down to say about a ten year loan.
At that point, your payments are actually a little higher, but you save on paying a lot of interest.
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|  On the other hand, you could add the extra money into a Roth IRA account every year.
In the end of savings time with the Roth, you could grab a sizeable chunk of money from it to retire on or just pick at it as time goes on after retirement.
As far as re mortgaging a house is concerned there are refinance charges etc. to consider as well as the obvious amounts of money.
Try to choose a good retirement specialist for some proper advice if the amount of money is considerable.
Below is a chart showing the Roth IRA limits.
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49 Years old and less |
50 Years old and older |
| 2005 |
$4,000 |
$4,500 |
| 2006 and 2007 |
$4,000 |
$5,000 |
| 2008 until 2012 |
$5,000 |
$6,000 |
| 2013 |
No information yet |
No information yet |
Your maximum 2012 Roth IRA contribution limit will phase out when you begin to earn above a certain amount.
If you are married and your filing jointly
The changes begin lowering at $173,000 per year, and your ability to be legally able to contribute will phase out at $183,000.
Married and filing separately, is less, and varies as well as other married or not married situations.
Do read the file Publication 590 from the IRS about the limits for those folks.
Roth Limits on Income for 2012
| Tax Situation |
Lower Income Limit |
Upper Income Limit |
Single |
$110,000 |
$125,000 |
Married |
$173,000 |
$183,000 |
Married Filing Separately |
$0 |
$10,000 |
Below:
The IRS tells us that for 2012 these are the rules:
| If your filing status is... |
And your modified AGI is... |
Then you can contribute... |
| If you are married filing jointly or qualifying widow(er) |
less than $173,000 |
up to the limit |
$173,000 and up but but less than $183,000 |
a reduced amount |
Greater than (including) $183,000 |
zero |
| married filing separately and you lived with your spouse at any time during the year |
Less than $10,000 |
a reduced amount |
$10,000 and more |
zero |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year |
Less than $110,000 |
up to the limit |
$110,000 and higher but less than $125,000 |
a reduced amount |
$125,000 and higher |
zero |
Amount of your reduced Roth IRA contribution
If the amount you can contribute must be reduced, figure your reduced contribution limit as follows.
- Start with your modified AGI.
- Subtract from the amount in (1):
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$173,000 if filing a joint return or qualifying widow(er),
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$-0- if you are married filing a separate return, and you lived with your spouse at any time during the year, or
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$110,000 for all other individuals.
- Divide the result in (2) by $15,000 ($10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
- Multiply the maximum contribution limit (before reduction by this adjustment, and before reduction for any contributions to traditional IRAs) by the result in (3).
- Subtract the result in (4) from the maximum contribution limit before this reduction. The result is your reduced contribution limit.
See the IRS paper called Publication 590 for further information about, Individual Retirement Accounts (IRAs), for a worksheet to figure your reduced contribution.
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