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Reply to "Anyone else dealing with this issue of "gap years" before retirement? "
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[quote=Anonymous][quote=Anonymous][quote=Anonymous]You could take out a home equity line for the few years between retirement and 59. [/quote] This might work if rates are low enough, but the interest you pay over the full period of pre-retirement (potentially 5 years or more) likely will wind up being more than the 10% penalty you would pay if you just took the money out of pre-tax accounts.[/quote] The fact that HELOC draws aren't considered income and aren't taxed should also be factored into the equation. And the fact that if you're withdrawing funds from a pre-tax account, you need to withdraw even more than you need in order to cover the taxes and the penalty. And you're cutting off growth. Using a HELOC even at a higher interest rate could legit be a much better option once you run the numbers. [/quote]
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