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A 66-year-old retiree is facing a dilemma that might sound familiar to anyone considering adding a little adventure to their retirement years: should he tap into his IRA to pay cash for a vacation home or take out a mortgage and let his nest egg keep growing?

He shared his situation in a recent Reddit post in the r/retirement forum. He’s single, recently retired, and living comfortably thanks to Social Security and a pension. He has no mortgage and about $1.9 million in a traditional IRA.

Now, he’s thinking about withdrawing around $400,000 to buy a second home outright, but he’s not sure if that’s the smartest move.

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“Can I afford to hit my ‘nest egg IRA’ for about $400k?” the retiree wrote.

On the surface, paying cash might seem like the simplest option. No mortgage, no interest payments, and no monthly debt hanging over his head. And since he’s not relying on his IRA for everyday expenses, he could technically afford the hit.

But here’s where it gets tricky: withdrawing that much from a traditional IRA in one or two years could lead to a hefty tax bill. Because it’s all taxable income, pulling out $400,000 could push him into a much higher tax bracket — and increase his Medicare premiums due to income-related monthly adjustment amount, or IRMAA, rules.

Still, some people in the Reddit thread pointed out a potential upside: by drawing down his IRA early, he could reduce the size of his required minimum distributions later. That could mean lower taxes in his 70s. For someone who doesn’t plan to leave a large inheritance, that’s something to consider.

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The other option? Finance the home and just withdraw enough each year to cover the payments. That way, his IRA stays mostly intact and continues to grow for several more years. He wouldn’t get slammed with a giant tax bill all at once.

But that plan comes with its own trade-offs. With mortgage rates around 6-7%, there’s no guarantee that his investments will outperform that in the short term. Plus, there are still higher tax brackets and Medicare premiums to consider.

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“I believe even just a $25k/yr withdraw would bump me up into the next income tax bracket (and IRMAA premium bracket),” the retiree explained.

Some Reddit commenters said they wouldn’t take on debt in retirement at all. “If you can pay cash, why bother with a mortgage?” one person asked.

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Of course, another option is to skip buying entirely and just rent. A lot of retirees in the thread shared that they prefer using vacation rentals — Airbnb, VRBO, even seasonal leases — so they can travel more freely without the responsibilities that come with owning a second home. No maintenance headaches, no property taxes, no long-term commitment.

But this retiree isn’t interested in that approach. He wants a place of his own — somewhere to settle into for half the year, not just pass through. He’s not looking to rent it out for extra income, and he isn’t concerned about resale value or return on investment. “I can’t take the money with me when I die,” he wrote.

There’s no clear-cut answer — it really depends on his goals, tax situation, and how he wants to live in retirement. Paying cash means a bigger tax hit now, but fewer bills later. Financing spreads out the cost but adds debt and interest. Renting? Not even on his radar.

Many people in the thread suggested talking with a financial advisor to run the numbers and weigh the long-term tax impact. In the end, it comes down to what kind of lifestyle — and peace of mind — he’s looking for.

If it were you, what would you do?

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This article He’s 66, Retired, And Has $1.9M In An IRA — Should He Pay Cash or Finance a Vacation Home? originally appeared on Benzinga.com