Financing home purchase in retirement

[Anonymous]

We are planning to retire in two years at 59. We should have a net worth of $7.5 million at that point. Over $6 million of that will be in our two 401ks.

We have about $800,000 of equity in our current home. I expect we will buy a new primary residence soon after we retire. I think it might be in the $1.5 to $2.0 million range.

I am starting to think through how we would fund that purchase. We have plenty in our 401k accounts, but I don't think we want to pull it out at once because of taxes. So we just get a mortgage? Can we get a loan against our 401k balances? I don’t want to use all our funds outside the 401ks for the house purchase.

[Anonymous]

Why not buy it right before you retire (but still working) and get a loan?

[Anonymous]

Anonymous wrote:Why not buy it right before you retire (but still working) and get a loan?

OP here—We may not know where we want to buy before we retire. We are still thinking through that part!

[Anonymous]

Anonymous wrote:We are planning to retire in two years at 59. We should have a net worth of $7.5 million at that point. Over $6 million of that will be in our two 401ks.

We have about $800,000 of equity in our current home. I expect we will buy a new primary residence soon after we retire. I think it might be in the $1.5 to $2.0 million range.

I am starting to think through how we would fund that purchase. We have plenty in our 401k accounts, but I don't think we want to pull it out at once because of taxes. So we just get a mortgage? Can we get a loan against our 401k balances? I don’t want to use all our funds outside the 401ks for the house purchase.

What is your expected sale price of your current home?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not buy it right before you retire (but still working) and get a loan?

OP here—We may not know where we want to buy before we retire. We are still thinking through that part!

If you don’t know where you want to move, how do you know that you will spend so much?

[Anonymous]

Stop saving in your 401k. You have too much of your net worth invested in it.

You can borrow up to $50k each against the 401k, i would look into that.

I would seek the advice of a professional as this is quite a complicated issue. The tax implications of taking the money out in one go vs having a higher income later, implications of

[Anonymous]

Will you have pension and what’s the timing for SS?

[Anonymous]

Sell the current house and pay cash.

[Anonymous]

Sell now
Rent for few years.

[Anonymous]

Talk to a banker. They will consider your assets. Will probably require a large downpayment in case you default. Use the current home equity for the downpayment.

[Anonymous]

Anonymous wrote:Stop saving in your 401k. You have too much of your net worth invested in it.

You can borrow up to $50k each against the 401k, i would look into that.

I would seek the advice of a professional as this is quite a complicated issue. The tax implications of taking the money out in one go vs having a higher income later, implications of

This is bad advice.
In wealth management you can borrow against assets (more than 50k) though not sure you have enough to borrow $1m to cover your future home. Talk to the custodian /wealth advisors of your 401k or wherever you hold your assets.