Ask Our Experts
By: Compiled by Carole Fleck; Source: AARP Bulletin Date Posted: 2006-02-09 12:53:00-05:00
The AARP Bulletin 's Ask Our Experts column provides answers to important questions affecting older Americans. Read below for this month's column, or review our archive of previously published questions and answers sorted by topic. (Note: Recent news or changes to regulations may affect the guidance offered in this previously published column.)
Submit your own question to the Ask Our Experts column via our easy-to-use online form.
Q. I am 55, single and a renter. I'm saving money to buy a home, which will take me at least five more years. Will I be able to get a 30-year mortgage when I'm 60?
A. It is very common now for people in their 60s to buy or refinance homes. If you have established good credit, you should be able to get a 30-year mortgage.
To reassure yourself, check with several lenders about the home-buying process. You may also want to check out the various types of loans and loan terms that are available to you. For more information, visit the U.S. Department of Housing and Urban Developmentwebsite. —Expertise provided by Craig Hoogstra
Q. I went to college after becoming an "empty nester." Last year I got laid off from my job, and my unemployment benefits stopped after six months. Now I am having trouble paying off my student loan. Can my Social Security check be garnished until the loan is paid off?
A. In December, the U.S. Supreme Court ruled the government can garnish up to 15 percent of your Social Security income if you default on your student loan—unless you receive $750 or less a month. However, other debt collectors can't garnish your Social Security income as long as it is kept in a separate account and not commingled with any other money. You should also know that your IRS tax refund can be seized and you can be sued by the government for the balance left on your student loan.
Before you get behind on your loan payments, find out if you can extend the terms of your loan, or if there are other repayment options that are available to you. For more information, visit online the company that primarily manages student loans, Sallie Mae. —Expertise provided by Sally Hurme
Q. I will turn 55 in September. I will need to make a withdrawal from my 401(k) plan this year and want to make it without incurring an early withdrawal penalty. Should I do it after my birthday? Does it matter?
A. In general, you cannot receive a distribution from a 401(k) plan before age 59½ without paying a 10 percent penalty. However, if you leave your job this year (the year of your 55th birthday) or in a subsequent year, and if your plan allows it, you may take a withdrawal once you're 55—without paying the penalty.
If you have already left your job, you may make penalty-free withdrawals starting at age 55 if you take the withdrawals not as a lump sum but in equal periodic payments—for example, from a lifetime annuity that you have set up. In any case, you will pay income taxes on your withdrawals. For more information on 401(k) plans and rules, visit the Federal Citizen Information Centerwebsite. —Expertise provided by John Turner
Share
preview