So do I. Congratulations on realizing your need and setting out on this journey of learning about your money and how to work with it effectively. There are two basic issues ... one is your income and how to deal with it to make each of those dollars coming in work most effectively. The other is your asset base and how to manage it to make it grow well, working harder for you than for the other guys ... and avoiding having too much of snipped off by the purportedly big-deal managers to slip into their pockets. Better to learn what you're doing, over the years, and become your own manager! Pay yourself those fees that they charge (probably wise to deduct the cost of some of your mistakes, as you learn). In the investment group that I've attended monthly for about 7 years, we call them the tuition fees in the University of Learning How to Manage Your Own Money! I bought some equity-based mutual funds over 20 years ago, charging 2.5% of the value of the current asset value of the account, annually. When you multiply 2.5 by 20+ ... what do you get? 50% of the value of my asset, right? Is that the original asset amount? No - the creeping value of the asset as it grew, over time. I started a thread (I think over on KT) a couple of weeks ago asking whether people had ever seen stock certificates grow like rabbits! Had a person bought 1 share of JNJ at the beginning of 1970 (I'm using this for illustration, not suggesting that you should buy it, or not buy it) about how many shares would they think that they'd own, now? If you go to Yahoo->Finance and put JNJ in the "Get quotes" box at upper left, you'll get a page that shows a lot of info about current situation of the shares, including a chart at lower right of the stock price movements today. Clicking at a long-term period under that chart will show you share prices over your choice of various periods ... plus info about several stock splits - twice 3:1, and 4 times 2:1. What does that produce? 1->3->9->18->36->72->144 ... right? Price in 1970 $180./share (in dollars each of which was "worth" a lot more than each dollar is now). Current price about $63.00. That is, $180. grew to about $9,072. How do you like them apples? Not only that ... I read somewhere a while ago about a numberof stocks which had increased their dividend annually for 25 years ... I think JNJ has increased theirs annually for 40 years, if I'm not mistaken. Which adds some sugar to the applesauce, right? When did you ever hear of a Guaranteed Investment Certificate acting like that? Also wise for you to learn to deal with both income and assets in a tax-effective way. If you can reduce taxes now, often a good idea to do so, if the system at issue is useful in your case. Deferral is frequently a good idea, as well, when available. In Canada, a number of people look at the current rate on a GIC and at the rates paid by a stock, and say they like the interest rate better than the dividend rates usually offered. But when Canadians earn a dividend on a Canadian stock, the tax rate used to be lower, and last year the system of calculation changed to make it even lower again. I can't believe how many Canadians I've run into over the years who didn't know that! Quite often ignorance carries a substantial price. I think that I've said to thousands, over the years, that learning how money works is an interesting hobby ... **that pays well**!! (I've said it so often, around here, that I think that people must be getting sick of hearing it!) Not only that, if you put your dollars into a investment where their numbers are guaranteed not to shrink ... they're almost always guaranteed not to grow either. I bought a stock over 40 years ago for about $4. and change, which at that time paid about a (tax-advantaged) nickel or a dime. Over the years the value of that stock has gone up, down and sideways. I could have sold it last May for about $107. ... and it pays me an annual dividend now of $3.48. There's one catch - it has been doubly involved in the U.S. sub-prime mortgage debacle. The share price dropped to the $80.s, then recovered to near $100., then slipped back into the $80.s ... and in the past few weeks, as the sub-prime issue got more complex, far-reaching and distressng, the share price dropped down through the $70.s, into the $60.s, closing since the first of the year in the $60.s ... and I suspect that the dividend rate will likely be cut. Am I about to sell it? No. I paid $4.20 over 40 years ago, and if I sell now, I deduct the $4.20 amount that I paid from the current $68.20 or so, leaving me with $64.00 capital gain. I divide that by 2, leaving me with $32.00 on which I must pay tax at my usual rate (i.e., added to the top of my other income this year). But it does leave me with the other $32.00 realized free of tax. However, I'm getting close to 80 years of age (79 next Wed.) and my current tax bracket is lower that will be the case if I leave all of those assets intact till I kick the bucket - for then some of them will be taxed at lower rates, but after that's used, others will be taxed at higher rates until they get to the top rate, and my executor will have to pay that on some of those realized capital gains, then. Also ... since I have no spouse (to which the tax-deferred retirement account could be transferred, tax-free at the moment, to be added to her assets, to provide her with income and on her death to have the residue added to her income and taxed then, at whatever rate) they'll be added to my income in that year, as well. Likely taxed at top rate. I've thought of selling some of the stocks that I've held for years, in order to have the taxable portion of the capital gain taxed now, at my usual lower rate ... ... but if I do that, I have fewer dollars to re-invest, to go on not only growing, but adding to earnings in those years, until my demise. As it is, I add those $3,000. or so that I'm required to withdraw from my tax-deferred retirement account annually to my annual income. Do you think that I should follow the advice of some hot-shot financial advisors who tell how to get that payment out tax-free? Borrow $50,000. to invest it in a variety of stocks, using well over $100,000. (I wish!) of stock certificates as collateral, making it a fully secured line of credit, at interest of 6%, i.e $3,000. per year, using my $3,000. annual payout from my retirement account to pay the interest. My deal with the lender is that I pay interest only on the loan. As the loan is used for investment, the interest is deductible. As an old fart that doesn't want to take heavy risks, I invest in some quality Canadian stocks - paying about 3% interest, and as they are taxed at low rate, I have about 2.5% after-tax income, which in other circumstances I would use to help pay the interest on the loan. Suppose I'd borrowed that money 15 years ago, paying interest only through those years. If my Dad died and left me $50,000. as a legacy, and I took it to the bank to pay off the loan, how much would I owe them? That'd be $50,000., right? That would have bought a lot of good things, 15 years ago ... much more than now. I gained from inflation. Suppose you'd put $50,000. into the bank, 15 years ago, and the bank paid you the agreed upon rent on your money, in the years between ... and you went to collect the value of your GIC today ... how much would the bank give you? Right! Exactly $50,000. That would have bought a couple of good cars, 15 years ago ... not now. I gained from inflation ... you lost. Such strategies should be used with discretion, taking into account various possible scenarios, some of them quite unattractive, with the operator able to deal with them without serious inconvenience. I never want to see my friends get margin calls on such loans, unless they're able to meet the shortfall, whether with other assets ... or immediate cash. Good wishes for using both your income and assets increasingly skillfully! As you have further questions, feel free to ask. If some of them seem a bit too private for you to feel comfortable with discussing in this public place, I'm sure that several of us who have responded here would be pleased to offer you our opinions should you contact us privately. ole joyful

Thanks for the replies. We have a mortage on the home of $50,000, a home equitity loan of $40,000 with an attached line-of-credit for $500,000 which we never touched. The two other loans are fixed at 6.6% but if we use the line-of-credit it will rise depending on the prime rate. I took it in case of emergency. The repairs will cost around $40,000 (if we do them all). Husband is 73, I am 57. He will probably retire next year (although, he doesn't really want to ever retire.)We couldn't afford to stay here if he retires. Everything is so up-in-the-air and it makes me nervous. Not sure how to proceed. I feel we should use cash. Jane

Fascinating discussion, and timely for me, as I am trying to decide whether to retire. My wonderful boss left last month for a new job and they transferred in someone who is a total idiot. We saw our financial advisor on Monday and he agrees that we can afford it. I am 61 and hubby is 49; he has eleven years before he can retire from his job (not Federal). I have 29 years in the Fed government, so would get a defined pension and keep my health benefits. We have been saving at a good clip for the past 15 years (married for 17 years) but took a hit in the dot.com bust and again last year. Since the market went haywire, I've focused on paying off the mortgage. Have $18K left to pay. Right now, our investments are averaging 4%, so the mortgage paydown seemed like the better option. Expect to have it paid off by next year at the latest. (BTW, we don't include home equity in our "assets" because we would have to sell to obtain the value, and we love our location.) My problem may be off-topic. I have no idea what I would do if I retired. We don't have kids and our parents are healthy. I have hobbies, but can't imagine staying home all day. Most of my friends are still working. You are lucky that your DH may be retiring soon.

I will need to supplement my 1/2 pay during these 1-3 years with $ from elsewhere. I understand the idea of "tapering off" your work hours. It'd be a gradual adjustment for you, and it'd allow your replacement plenty of time to question you about how you've done things. BUT if you're going to need to supplement your income, is it the best choice? If you keep working for that one more year (three seems like a long tapering-off time), then you'd not need to tap into any retirement account. I don't think anyone's going to be able to answer your question with a solid answer because we are missing several pieces of the puzzle: We don't know how much income needs replacing, how much you have in your retirement accounts, or how much your Social Security benefit will be ... much less how much you expect to need to maintain a comfortable lifestyle in retirement. Too many missing numbers in the equation.I mean, if you have $50,000 saved for retirement, you should not dip into that paltry amount ... on the other hand, if you're sitting on a million or more and are just looking for how to most efficiently make this happen, you should outright quit ... but none of us can give really good advice without all this missing information. Since you are planning on working until full retirement be aware that until you reach Full Retirement Age for SS your SS payment may be reduced. Since you're 65, I assume you were born in 1952 ... making your full retirement age 66. If you retire before 66 (and SS is a federal program; thus, the same everywhere), you will lose 6% of your SS benefit for each year you retire early. Given that you're so close, I'd say wait 'til you're 66 and collect full benefits. You can postpone your SS benefit until you're 70, and that makes your benefit grow by 4% per year. Should you do this? Depends upon your health, how long you expect to live, and how much other income you have available to you in retirement.