'I won't take out a loan': I need $18K in house repairs. Do I take it from my Roth, 401(k) or IRA?

By Quentin Fottrell

 'I plan to be debt-free in less than two years' 

 "I plan to retire in six years." (Photo subject is a model.) 

 Dear Quentin, 

 I need a new roof - it will cost about $12,000. 

 I have $4,500 in my bank account, $14,000 in my Roth, $43,000 in my 401(k), and $470,000 in a Traditional IRA. I'm 61, live alone, almost own my home, have no other debt and I plan to retire in six years. 

 I won't take out a loan - I plan to be debt-free in less than two years, so that's not a solution. Also, it looks like I'll need about $5,000 for a new fence within the next year or so. Which account should I take the money from to pay for the roof? 

 Nearing Retirement 

 Don't miss: 'I'm rich in everything but parents': I inherited $400K. Is it unwise to use this money to buy a house with my fiancé? 

 You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually. 

 Your unwillingness to take out a loan may end up costing you more in the long run, given that you would have to pay income tax on withdrawals from your IRA, plus lost returns. 

 Dear Nearing, 

 You have an $18,000 problem. 

 Another issue: Your unwillingness to take out a loan may end up costing you more in the long run, given that you would have to pay income tax on withdrawals from your IRA, plus the amount of money you will lose in lost returns on those funds. 

 Here is the true lifetime cost of withdrawing $18,000 from your traditional IRA. First, you'd end up paying $3,000 to $5,500 in income tax, depending on your tax bracket, so you'd actually have to take out closer to $24,000 from your traditional IRA. 

 Adding in the opportunity cost - over the next 20 years, the likely period of time when you will be making withdrawals from your retirement accounts - you would lose $47,800 in just unrealized returns at a conservative annual 5% rate of return. 

 So your unwillingness to take out any debt to pay for these repairs would actually cost you closer to $53,000. That's why you will hear CPAs and economists talk about "good debt" (HELOCs, in certain circumstances, and mortgages) and "bad debt" (credit cards). 

 An $18,000 home-equity line of credit (HELOC) would cost you approximately $212 a month with a 7.3% interest rate over 10 years (and cost $25,400 in total). Because HELOCs usually have variable rates, it would be better to pay it off faster than 10 years. 

 I believe you should take out a loan. You need to balance your future returns, how much money you have set aside for emergencies and taxes. If you do insist on tapping your retirement, use the cash, then move onto your Roth and, only as a last resort, dip into your traditional IRA. 

 Planning for retirement 

 Taking a step back, in your 60s, you should be focusing on maximizing your savings, minimizing your tax burden in retirement, planning when to take your Social Security benefits and adjusting your risk profile so you're not vulnerable to stock-market shocks, especially in those early years. 

 According to Charles Schwab (SCHW), if you're in a lower income-tax bracket (0%, 10% or 12% rate), "consider maxing out your Roth savings, where you pay the taxes up front, because your tax bracket in retirement is likely to be the same or higher than it is today." 

 If you're in a middle tax bracket (22% or 24% rate) "consider splitting your retirement savings between tax-deferred and Roth accounts so you can benefit from both tax treatments. You might also want to consider additional savings in an HSA," it adds. 

 And if you're in a higher tax bracket (32%, 35% or 37% rate) your tax rate in retirement is likely to be the same or even lower than today, so maximize your tax-deferred accounts - in this case, your IRA. Every $1 contributed to a traditional account avoids taxes at 32%-37% today. 

 Other challenges you'll face - beyond your house repairs - will be your own repairs. That is, your medical bills. Without long-term-care insurance, you will at least have the value of your home to tap in the event you need to move to assisted living. 

 Your retirement income 

 That's obviously not a lot to live on, but it doesn't include Social Security. When you decide to claim depends on when you need the income, but it also hinges on how long you expect to live. Are you a smoker? Are you in good health? How old did your parents live to be? 

 You can also keep working and collect Social Security once you reach your full retirement age. "Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits," the Social Security Administration says. 

 Your Social Security benefit is based on your 35 highest-earning years. For 2026, the maximum a person can earn in the year is $184,500. Social Security taxes will not be withheld above this limit. The maximum possible monthly Social Security benefit for 2025 is $5,251. 

 This is the time to stress-test your retirement, based on your estimated expenses. The 4% rule assumes 30 years of withdrawals. That's based on historical market returns. So if you retire at 67: Your $531,500 could potentially last you 30 years, if you took $21,000 a year. 

 There are several programs that provide funds, grants and low-interest loans for house repairs for seniors. Check out the USDA Section 504 loans/grants, Weatherization Assistance Program, HUD Title 1 loans and non-profits like Rebuilding Together. 

 Think carefully before tapping your retirement. 

 More columns from Quentin Fottrell: 

 'She is planning to move out of state': My sister sold our elderly mother's house from under her. What can I do? 

 'I'm not made of money': My heating engineer didn't fix my radiators on his first visit. Do I pay him a second time? 

 I'm trying to fix my relationship with my stepdaughter. Should my husband and I tell her how we have divided our assets? 

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 -Quentin Fottrell 

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