; Ask the Experts
QI’m retired and need
a loan. Can I
get it from my
401(k)?
AIt de- pends on
your plan and
whether it al-
lows you to take
a loan in retire-
ment. Typically,
loans are taken
by employees and repaid with paycheck
deductions. But if you’re retired, you don’t
get a paycheck. Ask your plan’s administra-
tor if repayment can be set up through your
checking account, and ask your financial
adviser how the loan could affect your tax
and investment situation.
QMy bank garnished my Social Security check for overdraft fees. Is this legal?
AFederal law generally prohibits credi- tors from seizing federal benefits to pay
a debt. But in June, the California Supreme
Court ruled that overdraft charges are not
debts, so banks can deduct money from Social
Security. Other states could follow California’s
ruling, making it more difficult to protect
Social Security benefits from bank fees, con-
sumer advocates say.
QI’m 63 and want to retire at 65. My only debt is a $79,000 mortgage. I’m about
to inherit $120,000. Should I use that to
pay off the mortgage, or should I invest it?
AUnfortunately, there’s no simple answer. In today’s environment, cash is particu-
larly valuable because it gives you flexibility.
If you have few assets for retirement, con-
sider keeping the mortgage and holding the
$120,000 in fairly conservative investments. If,
however, your mortgage carries an interest rate
above 7 or 8 percent, it might make sense to
pay down the debt or refinance. Consider con-
sulting a financial adviser (visit www.fpanet
.org) before making a decision. —Carole Fleck
Experts: David M. Snetro on 401(k)s; Stan Hinden on bank fees;
Philip White on mortgage debt. Send your questions to: Ask the
Experts, AARP Bulletin, 601 E St. N. W., Washington, DC 20049,
or e-mail askourexperts@aarp.org. Go to bulletin.aarp.org for
previously asked questions and answers.
