Using retirement savings to pay down debt is risky business. Do this instead

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A 62-year-old spent the bulk of their pension to pay down debt, leaving little for retirement. Here's what they should have done instead.

Dear Liz: I’m way behind on retirement funds. I did get pension funds from my employer after 25 years of service but used a large portion to pay debt that was crushing me. I’m widowed, age 62 and work full time as a nurse. I rent my place. How do I catch up? I have $200,000 in an IRA. Answer: This answer comes too late for you but may help others who are overwhelmed by debt as they approach their retirement years.

To itemize, your deductions would need to be higher than that amount. Furthermore, medical expenses must exceed 7.5% of your adjusted gross income to be deductible, notes Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. If your husband meets certain criteria, however, the deduction can include the expenses related to meals and lodging at the facility as well as the medical care portion, Luscombe says.

 

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