Aarthi Swaminathan
3 min read
My wife and I are both 73 and retired.
We have $2.5 million in tax-deferred retirement accounts. Our required withdrawals are about $80,000 per year. Our Social Security Income is about $60,000 per year and my wife’s pension is $67,000. Last year, we collected another $160,000 from dividends and interest.
We split our time between two homes, one in Pennsylvania the other in Florida, and also a condo that we rent out. The homes and condo are paid off and worth about $1.5 million. We have another $3.8 million in CDs, high-yield savings and stocks.
So here’s my problem: My wife wants us to sell the two-story house in Pennsylvania because I’m having problems going up and down stairs, and buy another home for about $1.2 million. We could get about $300,000 for the home, and pay cash for the balance of $900,000.
We have long-term insurance and very good healthcare policies. Can we afford to buy the more accessible home for an additional $900,000?
Thinking Carefully
You theoretically have enough to buy a $1.2 million home. But paying for it in cash may be tricky. Two considerations: whether you will have to pay a big tax bill for withdrawing that money from your investment accounts, and whether you may reduce your day-to-day expenses.
About those tax implications: To offer all-cash for a $900,000 home, you will likely need to sell stocks. That would trigger a capital-gains tax, and it could push you into a higher income-tax bracket for those capital gains. So you will need to plan carefully with your investment adviser.
In addition to potential tax considerations, Andrew Kurtz, a Pennsylvania-based wealth advisor at EP Wealth Advisors’ Office, also advised you to consider how the withdrawals and the capital gains could impact your Medicare benefits.
About your daily expenses: Mull over how withdrawing that money will affect your future cash flow, said Bill Van Sant, a Pennsylvania-based certified financial planner and an executive vice president at Girard, a Univest Wealth Division.
