Is it OK to Retire With a Mortgage?

Is it OK to Retire With a Mortgage? | Surprising Results

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2 жыл бұрын

What happens if you still have a mortgage when you retire? Surprisingly, many people do! This video discusses the pros and cons of having a mortgage in retirement and examines the reasons behind the common belief that is bad to have a mortgage in retirement. Many are sound, are few are not.
The video also discusses the risks associated with the "pro-mortgagers" point of view and concludes with specific conditions where it might make sense to have a mortgage in retirement.
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Пікірлер: 489

@grantbradley5084 2 жыл бұрын

Fortunately for me I had my house paid off at 38. Got married five years ago at 60. Life’s good.👍

@jasonjames4254 2 жыл бұрын

A bird in the hand is worth two in the bush. A million in textile stocks will not keep you warm in a blizzard. Wealth on paper is not the same as a roof over your head, food in your belly, and clothes on your back! I chose to pay off my mortgage as fast as I could even though I knew I'd probably make more money investing the extra cash. The economy can boom or collapse, but at least I'll always have a roof over my head!

@BirdDogey1 2 жыл бұрын

Full employment in your 50s is getting tougher with ageism.

@johnc2438 2 жыл бұрын

Made sure we had our mortgage paid off before we retired. No other debts, either. Wonderful feeling. We've been retired now for five years, and it's a wonderful feeling of being in control and not having any creditors looking over your shoulder. Our money is ours, not theirs. As a matter of fact, we have never had car payments. If we could not afford a new car -- cash -- we purchased a used car. And we have always driven our cars for a decade or more. And, no status vehicles (why give them our money and set ourselves up as a target).

@robocop581 2 жыл бұрын

We need people like you to teach Finance to teenagers in High School and Colleges.

@truthalonetriumphs6572 Жыл бұрын

Sad. With a 3% mortgage and deductions, you are leaving a lot of money on the table.

@truthalonetriumphs6572 Жыл бұрын

Why can't you have a child cover the risk, in case stock market goes south for a long time? They are going to get the property any way.

@andielliott7721 2 жыл бұрын

Having a "paid for" home enabled us to retire at 59 1/2...PLUS the peace of mind is incalculable.

@beerbrewer7372 2 жыл бұрын

Andi is 100% correct.

@kbanghart 2 жыл бұрын

Congratulations, that is awesome, however a lot of us aren't in that situation so it is helpful to hear some options about what to do.

@busterbrown1686 2 жыл бұрын

59 1/2 for 401k ?. When you retire you can draw on 401k at any age. Your retiring no penalty.

@cherylbroadenax1006 2 жыл бұрын

@@kbanghart yes of course. If u don’t have that option, I do understand. I do have that option as andi. Have a friend who brair beats me for wanting to pay off my house. Oh by the way. I have three houses. Two rentals. One rental is paid off. Have two more yrs to go on my primary resident. I will be 65 next month. So when I draw at 66.5 , I can have income along with my ss. It does give some relief having a paid for house. I plan to rent all three houses and buy an rv and hitch it to my truck and travel around and live in for who knows how long. I didn’t listen to this friend and as I had extra , I put it on the principal. Now I have two yrs or less to go. I threw everything at the principal except the kitchen sink. Been a long time coming. Smiles.

@kbanghart 2 жыл бұрын

@@cherylbroadenax1006 that sounds like a good plan! I've been scared off of renting mostly, but maybe I'll do it again, maybe with a duplex and live in the other side of it for a while. My wife and I will not be paying off our current mortgage, but our payments combined with the gain in equity will allow us to just about pay cash for a different place which would be very nice.

@warrenpeece1726 2 жыл бұрын

I did have a mortgage when I retired, but I sold the house and had enough to buy a house for cash. A friend suggested getting a mortgage and investing the cash, but I knew that I would sleep much better at night with no mortgage. Which I do.

@lorraineforte9175 2 жыл бұрын

I retire in four years,plan to pay off my mortgage with my pension,I don't want the sleepless nights.

@esthernoel3793 2 жыл бұрын

Thank you for yet another excellent presentation in elucidating complex retirement options.

@machintelligence 2 жыл бұрын

I don't have to imagine having a paid off house; I have one. It feels great, but I planned it that way.

@TheDjcarter1966 2 жыл бұрын

I think the thing to remember is if you have a pension plus SS you could have $60K a year guaranteed income before even touching investments if you have no other debts a $1500/month mortgage isn't going to put you in any kind of jeopardy.

@violabrown1459 2 жыл бұрын

Your absolutely correct 👏

@tumbleweedking5668 2 жыл бұрын

@@violabrown1459 Depends on their health and related expenses.

@violabrown1459 2 жыл бұрын

@@tumbleweedking5668 your right. That definitely plays a big part.

@mangos2888 2 жыл бұрын

Who has a pension anymore tho? Government employees only? Hardly anyone.

@gailmiller7035 Жыл бұрын

@@mangos2888 I have a pension from AT&T. That plus my SSA gives me $43K per year. I have one debt of $525a month, over my usual monthly expenses, for a timeshare that I love. My concern right now is should I pay off that debt of $16K from my small 401K or just pay each month. At first I was thinking pay it but, now, even though I am paying interest on it, I dont want the big tax hit on $16K in one year. I hope, every day, that I make the best decision for me. I am looking into renting out some of my timeshare credits via VRBO to at least pay part of my monthly expense.

@justrusty 2 жыл бұрын

I got a 30 year 3% mortgage when I was 61. I figure if I'm lucky, I'll die before I have to buy the whole house. 🙂

@spankynater4242 2 жыл бұрын

Sweet

@HolySchmidt 2 жыл бұрын

Thanks for the comment Rusty

@SuperEddietv 2 жыл бұрын

I think a lot of people are starting to think this way.

@wildflowerwind6941 2 жыл бұрын

Smart. Don't they look at your age before they approve a 30 year loan for a 61 year old? I am 61 and just took out a 15 year loan.

@justrusty 2 жыл бұрын

@@wildflowerwind6941 They legally can't, at least where I am. That would be age discrimination.

@markcummings6856 2 жыл бұрын

Totally loved this video! I could watch 100’s of similar. Thank you.

@teams3345 2 жыл бұрын

Having my home paid off made it a lot easier for me to retire at 57. I actually built another home two years later with cash with 75% of bedrooms on main level. For me it worked out. I understand everyone’s circumstance is different.

@coppingtonfarnham7731 2 жыл бұрын

When my wife had an injury, I cursed having a split-level home. I had to use the stairs so much I developed (temporary) sciatica from using the stairs dozens of times a day so I could assist her. We have both had falls on the stairs. I wished I had bought a ranch so the home would be more versatile as we age. As it is, we have to move out at some point because there are stairs in every direction in this house.

@RealSlopeDude 2 жыл бұрын

Over 65 here and still working. I need about 8 more years to fully pay off the mortgage. That's the bad news. The good news is that the monthly payment is less than $800 per month and the equity has appreciated quite nicely. Thanks.

@SeriousSchitt 4 ай бұрын

57 here, and I’m paying a ‘weekly’ payment of $1,100 per week. That’s the bad news. The good news is I only have another 4 months to go. So, not only have I shortened my term by over twenty years, but also I’m technically in for an $1,100 “in the hand, per week” pay rise. So the contrast is so much more positively felt by me, for having paid so much more per week (roll on that glorious day). Bear in mind also, you can never count your house as a financial asset (so a rise in equity means absolutely nothing) coz if you sell it where are you going to live? All other houses have gone up the same. Basically a mortgage free home is a “MINIMUM’ pre requisite to life itself!

@dorissteve912 2 жыл бұрын

You might not have a hundred million dollars to invest, but that doesn’t mean your money can’t share in the same opportunities available to others. You work hard for your money; make sure your money works hard for you.

@fredrickconte6270 2 жыл бұрын

The wealth you pass to the next generation can have a profound impact on your heirs, providing educational opportunities, the capital to start a business, or financial support to your grandchildren.

@dorissteve912 2 жыл бұрын

To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal. Remember, diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.Because investing can be complicated, consider working with a financial professional to help guide you on your wealth-building journey.

@henryclinton9317 2 жыл бұрын

can you endorse any ?

@dorissteve912 2 жыл бұрын

TERESA JENSEN WHITE does a perfect job. look her up on the web

@henryclinton9317 2 жыл бұрын

thanks for the info . Found her website and it really impressive

@suespony 2 жыл бұрын

Will be making my last house payment this may, same day I turn 62, so looking forward to a paid off home. Also considering taking my SS at same time, this will be a 3 k per month swing for me.

@wisconsinfarmer4742 2 жыл бұрын

feels good

@richsamuel2922 2 жыл бұрын

I'm in my 40's. I want to wait until I can get the max amount. This may change within the next thirty years.

@suespony 2 жыл бұрын

@@richsamuel2922 yes, no doubt things will be different by then, probably a cut in benefits. I don't need to take mine at 62, but am self employed, so can take it without penalty while I still work some. Planning on only working part time I think. I know you can make more by delaying, my break even age is 78, figured by then if I am still alive, I won't care about the extra money, rather would have my time at age 62 and take the smaller amount.

@beersyb1033 2 жыл бұрын

Thanks great info. Expecting to have a morgage in retirement

@1drummer172 2 жыл бұрын

I’m retired and I have a mortgage but I have no other debt and my mortgage is only 20% of my after tax income. Other than my mortgage I don’t finance anything. I’m living very comfortably and able to travel and enjoy life.

@j.m.7056 2 жыл бұрын

Same here!

@rogerwa123 2 жыл бұрын

I am 57 and have a 30 year mortgage that started a few years ago. It is at something like 2.65%. I would rather have it paid off, but we sunk ~$500K into our four kids private educations without debt. The cost of that was not applying it to our house. I also believe that there is a balance between sacrificing today vs living today. So paying off a crappy house so you can live debt free, for me, is a less attractive option than enjoying myself in a nice house with a mortgage. You never know when you will be called home and you can't take the money with you. The way I view this is that I have three retirement sources of income - SS, a defined benefit retirement plan, and the substantial 401K I have been accumulating since I started working. The SS or pension will pay the mortgage, so I will not be on the street. While it is tempting to use assets I have to pay off early, I feel I am better letting the money work for me. Historically, it should be pretty safe to assume I can earn higher than 2.65% over the long run.

@jodylarson4697 2 жыл бұрын

"When you have no debt, what you do have is cash." Being debt-free in retirement has tremendous advantages, one of which is that you can save up the money you were paying out in debt payments and use it for other expenses. For example, if the house needs a new A/C unit for thousands of dollars, you have the cash to pay for it. Becoming debt free while still keeping your assets intact takes some planning. Remember that your house is an asset. Depending on how much you owe, you can sell it, pay off the mortgage, and buy a smaller house with a smaller mortgage--or no mortgage at all. Just don't deplete other assets, such as retirement savings, to get there.

@lorraineforte9175 2 жыл бұрын

Jody, I see you quote Dave Ramsey

@jodylarson4697 2 жыл бұрын

@@lorraineforte9175 Yes, he did say that.

@truthalonetriumphs6572 Жыл бұрын

Use it for other expenses?? Paying off the mortgage was the biggest outflow of cash. With a 3% mortgage and deductions, you are leaving a lot of money on the table. Why can't you have a child cover the risk, in case stock market goes south for a long time? They are going to get the property any way.

@TheOrangekrate 2 жыл бұрын

I think you should have discussed the fact that the standard deduction has gone up. For most people there’s no tax advantage to having a mortgage with the higher standard deduction. For a married couple the standard deduction is now over $25,000.

@j.m.7056 2 жыл бұрын

I agree that would have been useful to include.

@stephaniewilson222 2 жыл бұрын

We owe so little and have low interest and payments on both of the homes we own , both our home and the home we rent to our daughter that the standard deduction is higher and we get no benefit from owning those two homes on our taxes.

@j.m.7056 2 жыл бұрын

@@stephaniewilson222 Same situation for me.

@Columbus1152 2 жыл бұрын

Should also point out that if you're past the halfway point in your mortgage, the mortgage interest that you can deduct is decreasing.

@financialsombrero9097 2 жыл бұрын

Great vid, and great reply Orangekrate regarding the new standard deduction amounts. In addition to this line of thinking, a tax savings from a mortgage is not a constant variable, but more the result of the amortization schedule that benefits the lender much more than the borrower in my opinion- all of this should be considered when stating that one will receive "tax savings" via a mortgage.

@georgesealy4706 2 жыл бұрын

I had my house paid off about 3 years before retirement. One can live pretty cheap with no mortgage or rent to pay. That said, people can have a modest mortgage when retired. Suppose they sell their house for $300K, and then buy a retirement house in a 55+ community for $350K. Then the best thing to do is have a $50K mortgage and stretch it out for the longest time possible, 30 years. The monthly payment at 5% would be $268. That's not too bad.

@jamgarza1 2 жыл бұрын

Well I’m gonna watch this video a few more times it’s slowly settling in. Thank you for the info.

@tinalippincott9823 2 жыл бұрын

Timely discussion for our situation with retirement (well, not mine, lol) looming. Thanks, Geoff, for always presenting both sides of the conversation in a calm and reassuring manner. I believe Ric Edelman is a proponent of having a mortgage in retirement. As you noted, many other investment analysts are not.

@MC-bw5fc 2 жыл бұрын

I definitely like your perspective on this topic, priceless..

@angelalopez2003 2 жыл бұрын

Peace of mind and security goes a long way... I became a widow in 2020 at 54. I refinanced our house to 1.99% and began making extra payments on the principle. I now owe about $106,000. I'm also continuing to invest in my retirement account. I don't want to be stuck with a mortgage in retirement. Imagine if you suddenly lost the income of your spouse... that's a major deficit. Thank goodness I'm young enough to keep working for a while.

@digwealth740 2 жыл бұрын

Angela, so sorry for your loss. Your story is very similar to mine. My husband passed 7 years ago at the age of 51. I was 53. I just refinanced our marital home. Hoping to pay it off within the next 5 years.

@angelalopez2003 2 жыл бұрын

@@digwealth740 That's my goal, too. We are stronger than we know.... we can DO this!

@wildflowerwind6941 2 жыл бұрын

I am 61. My husband passed 11 years ago. He was 57. And our son was 11. He was the bread winner. I just refinanced a 100k mortgage at 2.365% for 15 years. Going to pay it off much earlier. My financial planner said I make more investing my savings so I shouldn't use it to pay off mortgage. I don't know. For peace of mind I wish it was paid off. Son has autism and doesnt work. I am taking my retirement at 62. Then will take husbands retirement for widows at age 66 and 8 months.

@angelalopez2003 2 жыл бұрын

@@wildflowerwind6941 It's so hard to make these decisions. I know for myself, I was so used to discussing future planning with my husband, and now I have to think for myself. I'm doing everything I can to get educated about finances and financial planning. So far, I've learned there are MANY different paths (and opinions)😆I just try to focus on core strategies that feel right for ME. That's why I invest in both my house, as well as retirement accounts. We are the only ones experiencing our life. I wish you all the very best in your future!

@TheBeagle1956 2 жыл бұрын

@@wildflowerwind6941 Your financial planner makes more money if you keep it with him. I doubt he/she has your best interest at heart.

@plants4thewin 2 жыл бұрын

Very well balanced. Im still on Team Pay It Off, but I appreciate the balance. It makes me more confident in my choice.

@tebbywafer1665 2 жыл бұрын

I don't feel that his argument was balanced. It bothered me that it seemed he was pretending to be balanced when he was purposely skewing his argument toward paying off the house. For me, the primary factors are the total rate of return and risk premium.

@plants4thewin 2 жыл бұрын

@@tebbywafer1665 its been a while since I watched this video. I think it depends on a lot of factors. For me age is a big one, also my industry is wonky with the layoffs etc. All the best to you in whatever you decide.

@truthalonetriumphs6572 Жыл бұрын

Sad that people are so risk averse. With a 3% mortgage and deductions, that's leaving a lot of money on the table.

@truthalonetriumphs6572 Жыл бұрын

Why can't you have a child cover the risk, in case stock market goes south for a long time? They are going to get the property any way.

@aaronchandler2380 2 жыл бұрын

I'm asking myself this exact question right now. More good info!

@yellowboxster06 Жыл бұрын

Great video; interesting analysis.

@sactopyrshep 2 жыл бұрын

Another excellent and realistic retirement video.

@HolySchmidt 2 жыл бұрын

Thanks Cathi

@williamjohnson2199 2 жыл бұрын

I think something to be explored further is, "Where is the mortgage payoff money coming from?" If it's coming from a month-by-month sacrifice over the years to synch up payoff and retirement, then I'd call that a good plan. Not the best ROI, but a good compromise between heart and head. If it's being taken "lump-sum" from your nest egg, then that's almost always going to be a financially unsound decision in terms of net return, long-term cash flow and possibly income taxes.

@billtisdale6122 2 жыл бұрын

Retired and signed a new mortgage after moving across the country. Property here is higher than where I sold, so a mortgage. Not an issue if your retirement cash flow covers the mortgage as part of your retirement budget. 3 sources of retirement income and only using 2 right now, the 3rd is left to grow. Mortgage interest and property taxes are still far below the standard deduction, so mortgage interest/taxes are not “tax deductible “.

@bartoszdobroslaw9774 2 жыл бұрын

Great stocks and I just bought in on them, but I'm interested in making short term profit, let say turn a $150K to $500k in 6months, I'd appreciate tips on how what stocks to buy to make this much profit.

@bartoszdobroslaw9774 2 жыл бұрын

@Fred Howard That sounds great and how do i connect with her ?

@bartoszdobroslaw9774 2 жыл бұрын

@Fred Howard Okay i just found her website and left a message for her. thanks.

@georgejetson4378 2 жыл бұрын

Give me your $150k. I’ll turn it into $600k in 6 months or less. Trust me!

@mangos2888 2 жыл бұрын

🤣🤣🤣🤣🤣 did not disappoint

@andrewe.7907 2 жыл бұрын

HOLY SCHMIDT! I want to see more of you!!

@alive1419 2 жыл бұрын

I am 55 and just paid my house off in December 2021. It’s such a relief . I got a lump sum of money and that’s the first thing I did . I invested the rest of the money in the market . It’s the biggest relief just paying the home owners and taxes and regular bills. I’m literally debt free 🙌 there’s no advantage in keeping a mortgage since the standard deductible isn’t worth it anymore

@frankvasquez9446 2 жыл бұрын

Congratulations on ur house being paid for. It's my goal also to pay off my home before retirement

@scottrichardson3961 2 жыл бұрын

It's NEVER paid off as u have taxes/insurance owed even AFTER mortgage payments stop!

@coppingtonfarnham7731 2 жыл бұрын

I did the same thing with a lump-sum inheritance. The house has gone up in value the last few years, but the investment portfolio is down 75%. That's why I didn't buy the advice from "professionals" that I should continue to pay a mortgage and invest the money I could use to pay the home off. I expect the stock portfolio to recover eventually, at least to break-even, but at least I didn't invest money I couldn't afford to lose.

@miket9670 2 жыл бұрын

Excellent presentation as usual! We are retiring in 2-years and are firmly in the "no mortgage, no way" camp. Thank you for the very rational discussion of an emotionally charged topic.

@anitas5817 2 жыл бұрын

Exactly my situation. I’ve been paying ahead on my mortgage and having it paid off will double my available monthly funds. I’m retiring the month after it’s paid off.

@stephenharper6638 2 жыл бұрын

I remember when ppl would brag their mortgage was only 7% interest!

@laurac56 2 жыл бұрын

My “mortgage payment” isn’t the problem, it will be the taxes and insurance (New York State).

@stephaniewilson222 2 жыл бұрын

I can relate , same here in Texas. Taxes and insurance are ridiculous and are almost half our mortgage payment.

@viewpoint2814 2 жыл бұрын

Sell and move to lower property tax state. Colorado is less.

@graceweber2822 2 жыл бұрын

Same here. I live in California. Taxes keep going up up and away.

@wildflowerwind6941 2 жыл бұрын

That is a whole different discussion.

@lorraineforte9175 2 жыл бұрын

Laura C, I'm on N.J., people who live in high property tax areas like us would wise to relocate after retirement, so we can get more for our money

@MrGoodaches 2 жыл бұрын

As usual, Geoff's presentation of relevant issues from all sides is very helpful. I lost my last house in divorce close before retirement. So I didn't have equity to flat out buy my retirement home. My remaining 401K balance was/is could pay off my new mortgage 4 times over but the tax hit to disburse that much money in one year is a non-starter! So I've been going along satisfied with the idea that my portfolio performance is several % higher than my mortgage. This vid has compelled me to revisit the thought process. I'm now considering knocking down my mortgage early in a few chunks. First instead of a Roth Conversion I'll disburse what I can get at a low tax rate in a pre-Soc Sec year and apply it to my mortgage. Also, when my RMDs begin I will have income further exceeding my modest lifestyle expenses. I'll partially use the first few years of excess RMD income to pay off the mortgage about 18 years early. Anyone else doing similar? Anyone see false logic in my new assessment of what to do with my 3.4% mortgage?

@f430ferrari5 2 жыл бұрын

Your thought process is all good but there really isn’t a right way necessarily. The best thing any of us can do is be best prepared to have the “flexibility” and “options” to make the best decisions possible. You don’t necessarily need to do Roth “conversions”. You can establish a Roth IRA any time. You can still withdraw from your 401k and at low tax rate and pay down mortgage faster and put some into Roth IRA. The limit is only 6k and 7k depending on age. I think we are both behind on the Roth side. Not enough. It’s never too late to start. Try to be in a cash heavy position also. It will also provide security and flexibility. Follow buy low sell high concept. If market high put less into Roth IRA and pay more mortgage. If market low put more into Roth IRA and less on mortgage. My thinking is that at 3.4 interest rate there is nothing wrong with carrying a balance into retirement so long as it’s only less than 5 years to pay off. Who knows. Interest rates could climb back up to 5% in 10 years or maybe even 5 years. I’m at 3% mortgage rate.

@thomaschew2191 2 жыл бұрын

As an individual that personally took the attitude that owing a home mortgage free was less stress than making payments for many years possibly after retirement and putting money into investments is tough to rank which is best, but from my perspective today diverting what was my mortgage money into my 401s has a peace of mind that I cannot fully describe. Yes there is risk either way but in disaster mode you are not going to be evicted from a paid off home. I think being debt free as a middle class wage earner is the way to go and putting as much money into retirement even if you are starting at say age 60 will serve you well with less stress. I also think having several retirement income sources is a good idea. I know most of my co-workers my age (60 ish) have mortgages with 10+ years left and some but not a whole lot in savings, I find that scary but it's not really my problem. One of my co-workers is approaching 70 has 10 years to go on a mortgage on a house that is worth around $450 high tax area so he has to work for at least another 6 years even then will be underfunded for retirement and his spouse will not allow a move into a less expensive place. We tend to be stubborn as we get older I think it best to have financial peace rather than lifestyle happiness but we are all different.

@jeffreyshier9021 2 жыл бұрын

I’m totally confused with is why I have a financial advisor.

@shoeboxSD 2 жыл бұрын

Playing the stock market VS debt free seems like a dated argument since we had the 2008 crash. With all the FEDS quantitative easing pumping up the stock market, really the safest choice in the near future is owning your home outright.

@McGruph Жыл бұрын

Thank you for this video. I am retiring in 2 yrs (at 55), and this question has been on my mind a lot. 🤔

@somenoonsomenoon8874 2 жыл бұрын

Great show

@HolySchmidt 2 жыл бұрын

Thank you

@quitusmaximus4664 2 жыл бұрын

Two years ago we bought 30 acres in a rural area. To develop the property in retirement for our own use we will need a about $150K plus the the sale price of our current home that will be paid off right before we retire. So we know that we will have a $150K mortgage going in to retirement. However, we also know that our combined 401(K)'s and social security will let us pay it off in 6 years instead of 15. The idea of having a mortgage in retirement used to scare me but financially now it will allow us to build out what we want and focus on enjoying our hobbies. We also look at this as an investment since the property values in the area we bought have doubled since 2019 and since the property is primarily going to be agriculture - taxes are extremely low.

@bridgecross 2 жыл бұрын

Debt is such an emotional subject for people, if you even touch this subject people get ornery. Obviously everyone would rather have their house completely paid, not just in retirement but at any point in life. If that's feasible without sacrificing other growth needed for retirement survival, good on you! I'm plowing my money into investments so that I'll have decent income in retirement. With a fixed rate mortgage at a rock bottom rate, that's a pile of practically free money. Why should I sacrifice to pay that off? I don't even care if the house is paid off when I die, my kids are just going to sell and get the equity out anyway.

@rogerwalker1266 2 жыл бұрын

The way I see it, your house IS your investment. Pay that off first, and definitely before retirement. I believe real estate is better than anything today.

@MuzixMaker 2 жыл бұрын

@@rogerwalker1266 you can’t eat your house. It’s illiquid and transaction costs to get cash out of it are very high.

@Dbb27 2 жыл бұрын

You can walk and chew gum at the same time. The trick is to start young with both investing and working towards paying off your house.

@martyrosa5327 2 жыл бұрын

@@rogerwalker1266 Sorry, but no. The stock market has returned 80% from the COVID lows.

@stephaniewilson222 2 жыл бұрын

I think it really depends on the person. Our mortgage is very low , but our escrow account is very high because taxes and insurance in our part of Texas are ridiculous. Even if we paid off the mortgage we’d still be paying over 400 a month into an account to save for insurance and taxes. So the extra 500 or so we have to pay toward the mortgage principal and interest is not going to affect us all that much when my husband retires . We would rather have the money in the bank ,or invest it , not put it toward the house at this point. Frankly in the five or six years until my husband retires we could not pay the mortgage off even if we wanted to. But I don’t think we would even if we could . We would rather save. We will never be under water on the house we’ve owned it long enough and prices have gone up a lot . We have a low interest rate . So I think everybody has to do the math for themselves. Great video , I think it will benefit a lot of people! I really enjoythis channel so much! Thank you!

@MuzixMaker 2 жыл бұрын

Sounds like a good plan for you , congrats!

@lorenwillis425 Жыл бұрын

And when either one of you hits 65, your property taxes will go down a lot. At least that was my experience, a 60% drop from the senior exemption.

@bjbhehir 2 жыл бұрын

I didn't pay off my mortgage on my primary home because I never had one, wrote a check to the builder on day one. I was able to retire at 50 and spent the about 6 summers on Maui in a small condo close to Napili beach that my wife and I had to completely gut and remodel it ourselves. We bought the worst condo closest to our favorite beach, we VRBO it in the winters when we're skiing in Tahoe. We ended up buying another one in the same complex and remodeled that one and rented it out year round. Before Covid we sold both of them and paid off our other rentals. Now we're living off our rentals and in a few years I can get Social Security and tap into our 401K if needed. I like having no mortgage payments!!

@violabrown1459 2 жыл бұрын

All the RIGHT MOVES ✅

@larryhawes8295 2 жыл бұрын

5:31 not many of us get a mortgage tax write off with the larger standard deduction. Just sayin' and great video as always.

@thomfiel 2 жыл бұрын

When you take out a mortgage, the first several years are mostly spent paying down the interest. You're not building a lot of equity yet. After that, the payment becomes more equity and less interest. So, your tax write-off is huge for the first few years, then less and less after that. After about a decade, the interest tax write-off is negligible. Therefore, once you get to that point, there's no tax advantage to having that mortgage. You may as well pay it off, if you can. Right now, inflation is going back up, putting a damper on stocks and most other investments. It's the same thing that occurred in the 1970s. However, it's not hurting home values. And it probably won't. So it makes more sense at this time to pay off your mortgage early than to invest in other things which can lose value due to inflation.

@sambira 2 жыл бұрын

I think the main thing about carrying a mortgage in retirement is to make sure you always have enough money to pay the mortgage off when you want and still have enough to live on.

@Dbb27 2 жыл бұрын

I think it’s better to pay up in the beginning. You can increase the principal to interest ratio. Looking to get a tax savings on 25% of the interest paid out isn’t a win. You’ve still shelled out 75% interest.

@teekay_1 2 жыл бұрын

"So it makes more sense at this time to pay off your mortgage early than to invest in other things which can lose value due to inflation." Actually it's an argument not to pay it off. Put your money in the bank instead of the stock market and let inflation take it's course. Last year's dollar is worth 93 cents, and if inflation keeps eating away, you're paying off the same debt with dollars that are worth less and less. This is especially true if you have some sort of pension or annuities that are indexed to inflation.

@yourgooglemeister6745 2 жыл бұрын

I plan on getting a HUGE cash out refi on my house somewhere in my 70's, maybe not even pay it because as my homestead it is safe. Live out my golden years in style. Can't take it with you and it's not my problem after that!

@zoomzoom3950 2 жыл бұрын

I can see pro's and con's of each. But it comes down to a simple comparison for me: If I pay off my mortgage, I'll be taking less out of my "savings" for my retirement living expenses; leaving more in my savings to grow / lose / reinvest. If I don't pay off my mortgage, then it's the opposite. The next few years are shaping up to be more challenging in the markets; what I do when I'm ready to retire will depend on the state of the markets. I'm planning for a prolonged recession and probability of depression with high/rising inflation.

@joer1678 2 жыл бұрын

It all depends on your payment and equity

@terryB4713 2 жыл бұрын

Appreciate your new video I would love for you to elaborate on paying mortgage off if you have funds in a retirement plan which puts one into a high tax bracket vs just cont to pay mortgage? I believe a lot if retired people have this problem thats why they cont to just pay mortgage monthly.Not only Tax bracket is high but ones Social Security will also be affected especially if you have a large principal. Appreciate your opinion

@j.m.7056 2 жыл бұрын

You might benefit from consulting an accountant on this issue.

@susanlewis1953 2 жыл бұрын

In the UK our mortgage is 1.49% but deals are shorter term. Focusing on investing in the main and small mortgage overpayment. Will have the option to clear the mortgage in full when the balance is relatively small. Thanks for the video 😀👍

@jayo6725 2 жыл бұрын

Bought a home at 54 with 5% down and 30 year term. When I retired I decided to keep the mortgage but refinance to the lowest rate possible with longest term. Eventually I'll sell the house and rent. I'll use the house sale profit to subsidize my rent payments (the PITI I paid on my mortgage will provide the base rent payment). In that way I'll be able to use my equity in the house as opposed to having someone else profit from it. Plus, I won't have to worry about the maintenance costs of owning a home which people tend to leave out of the equation.

@garyvancamp5452 2 жыл бұрын

😊 Sell the big house and pay cash for a smaller place, free cash flow in retirement is great. 👍 Folks really need to stop trying to impress the "Jones's" and live very comfortable, a modest place to live (condo) and a very modest car to drive will make you very comfortable and HAPPY. 💰 The very best part of this type of plan is that it reduces all that monthly stress of all the expense that a larger home has, live modestly. 👍

@sunflowermarcia7277 2 жыл бұрын

You have explained this well. The choice between small mortgage payment and leaving that money invested is a tough one.

@HolySchmidt 2 жыл бұрын

It is. Thanks Sunflower

@dipaknadkarni62 2 жыл бұрын

Thanks. As I just recently retired after nearly 30 years in the Navy all over the world I had no idea where I would live but here I am back in Florida. I only have 29 years to go on my mortgage. I am paying extra towards principle each month so I might have it paid off at 21 years. But going to add more so maybe 15 years. My interest rate is 2.5%. Got very lucky with no points last Summer.

@jb9201 2 жыл бұрын

Nothing beats peace of mind Pay off the mortgage

@texasjack 2 жыл бұрын

I used to tell my teenagers - nothing good happens after midnight! Not that they listened...

@keithfreitas2983 2 жыл бұрын

I have a mortgage and am retired. Wish I didn't, but had no choice with a divorce after 42 years. Had to split the assets and didn't want to lose the house so I refinanced. Had to sell the rentals, give up half of my IRAs and annuities and one of my monthly retirement funds. Spent the whole year paying off the IRS then retired. Thank God I make enough to pay my bills and even help my children and grandchildren.

@rogerpullin8997 Жыл бұрын

I have not had a mortgage since my late thirties, and let me tell you it has been a wonderful life, mid sixties now thinking of full retirement at 70, to each his own, my life is not perfect.

@vincentortega4284 2 жыл бұрын

When I retire; I do not want any debt, unless that debt is invested into an asset that generates income.

@mangos2888 2 жыл бұрын

Isn't that what your mortgage is?

@michaelmills9084 2 жыл бұрын

all ways great!!

@Sheil-hard Жыл бұрын

I’m closing in on my retirement and I’d like to move from Minnesota to a warmer climate, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways

@martingiavarini Жыл бұрын

I can’t focus on the long run when I should be retiring in 3years, you see I’ve got good companies in my portfolio and a good amount invested, but my profit has been stalling, does it mean this recession/unstable market doesn’t provide any calculated risk opportunities to make profit?

@lipglosskitten2610 Жыл бұрын

There are a lot of strategies to make tongue wetting profit especially in a down market, but such sophisticated trades can only be carried out by proper market experts

@hermanramos7092 Жыл бұрын

I agree, my profit has been consistent no matter the market situation, I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2020 this time with guidance from an investment adviser that was recommended by a popular economist on a subreddit, long story short, its been 2years now and I’ve gained over $850k following guidance from my investment adviser.

@martingiavarini Жыл бұрын

@@hermanramos7092 I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?

@hermanramos7092 Жыл бұрын

@@martingiavarini All of this happened in less than a year after ‘Catherine Morrison Evans’ told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.

@davidpowell3347 2 жыл бұрын

A way to look at it: maybe I shouldn't have a mortgage but if I already do,should I pay it off immediately? Or faster than the monthly payment schedule but not all at once? Or just at the minimum rate of making the monthly payments? At the present time,assuming you have a fixed rate mortgage with low rates that are very low in comparison with the ongoing inflation rate,there is plenty of incentive for keeping the mortgage around for a while longer. Even if you have investments that you could liquidate to pay the mortgage off quickly. Slightly different question: If I have a war chest of cash in the bank should I deploy all of it towards buying a house or should I take out a mortgage with an eye towards possibly paying off the mortgage early by deploying the cash at more or less my leisure -- think I might want to get that cache of cash down to below the NCUA or FDIC insured maximum amount-- as you mentioned some people with a mortgage are depending on stock market or other investment proceeds to supply the money to make the payments on the mortgage,other people have a guaranteed stream of income such as government pensions and Social Security that can easily supply the payments on the mortgage.

@thomasschellberg4235 2 жыл бұрын

Best alternative use of money: That's why I took my social security early and left my money in my 403b. The extra money I made in the stock market (403b) more than made up for my expected reduced social security payments in future years.

@wildflowerwind6941 2 жыл бұрын

Thank you Holy Schmidt. I am a widow of 11 years. Very timely video for me. Just refinanced two days ago. 100k at 2.365% for 15 years, $660/month loan only. No fees or buy downs. Closing costs $1,120. Hope to pay down before 15 years for peace of mind. Previous mortgage 4.5% with 15 years left on 30 year loan. Financial planner told me not to pay off loan and refinance. I hate having debt but I also like to make money. lol My risk tolerance is moderate conservative. I am going to take my social security retirement this year when I turn 62. Then take my husbands ss retirement when I am 66 and 8 months. Thank god we saved money and I have enough invested to live on without the ss.

@brfulcher 2 жыл бұрын

At 60 and semi-retired with a paid off mortgage, we moved and decided to get a 2.75% mortgage on the new house. I'm finding that having that large pile of after-tax money available allows me to think about interesting things like doing more aggressive Roth conversions and such (though it's all invested right now).

@SandMark22 2 жыл бұрын

Much of this is based on circumstance and cash flow. One example not discussed is those of us that receive a steady pension. A steady pension, combined with social security income provides me more than enough cash flow to pay a mortgage in retirement and still have a “lifestyle.” But that was part of the decision I made 30 years ago when I looked for employment. I took the Stephen Covey approach and “began with the end in mind.” 30 years later I’m glad I did.

@Retiredmco 2 жыл бұрын

Absolutely NOT 🚫!!! I didn't and I'm so glad I'm debt free!!!

@winniethepoohandeeyore2 2 ай бұрын

Bought my house in 21 using an SSDI income. Overpay the principal every month, already knocked years off the life of our mortgage.

@70qq 2 жыл бұрын

thanks

@billmulvihill8452 2 жыл бұрын

All those who want to pay off their mortgage, the money is no longer accessible to you, unless you sell. P&I is many times, only 40% of your total monthly payment. The rest is taxes and insurance. That’s still there to pay every month. Did you forget about that?

@JerryStevens 2 жыл бұрын

We don't have a mortgage and are glad we don't but there are financial circumstances I can imagine when it would make sense to have one. They just don't apply to us.

@bayareagrl4ever526 2 жыл бұрын

I think it’s better to have a mortgage then rent and have the rent continue to go up. My mortgage is less than rent in the Bay Area, CA.

@j.m.7056 2 жыл бұрын

Same here in Knoxville, TN.

@benspotts1432 2 жыл бұрын

I retired with a mortgage knowing I had the funds to pay it off over time with no problem. Well, almost no problem. I realized after time that the money I was pulling from IRA's was causing my tax bill to be a bit higher than it could have been if I had no mortgage.

@meibing4912 2 жыл бұрын

Great overview. If you have a capital reserve you should let your mortgage ride. But it may not be for everyone. However, there is a middle way which is choosing a low(er) mortage leverage. Few are the home owners, who should pay down to zero. Liquidity (money in your hand) is worth a lot - really a lot - when you need it, because that's when no-one will lend you money even if you can repay over time. Paying down your mortgage 100% minimizes you liquidity, and nothing is more expensive and fiscally dangerous than being illiquid.

@kirkland5674 2 жыл бұрын

Piece of mind is very valuable in retirement. As stated, your options dwindle as you get older, so having no debt means you don’t have to worry about going back to work at 85. Pay it off, don’t retire until it is paid off, wait as long as you can to take SS, take only 4% out of your retirement & don’t index for inflation. You don’t need financial stress in your golden years.

@WaterDR-tw8re 2 жыл бұрын

My 84 mother has owned her house for years. However her property taxes are $1000 a month….

@vuho2075 2 жыл бұрын

Guys, need to look at the whole picture. If you got a $200K mortgage + a $1M stock portfolio, then the debt is just a joke. If you got the reverse situation, then you're in deep trouble. Don't just look at 1 side of the coin and jump to conclusions. Full disclosure - I'm on track to payoff my mortgage @ 50. Doing this purely for psychological reasons. Most people I know take their sweet time paying off the mortgage @ 3% interest (tax deductible), and put their excess cash into the stock market earning 9%+ return...

@robocop581 2 жыл бұрын

Very good points. My take on outstanding mortgage upon retirement is most people will probably have less than 5 years remaining. For my case there will be $150,000 remaining when I retire which I can easily pay off. The gains from that $150K in the stock market in the next five years won't make a significant change in my net worth as I won't invest that amount fully, maybe only 50% as like most people my aversion to risk increases as I age. I planned my retirement well enough so I don't have to take unnecessary risks in the stock market when I retire. Either way I'm good letting the mortgage run its length or invest the money instead. As for why I still have an outstanding mortgage when I retire, it's because I bought a primary residence in my mid-40s and I invested most of my disposable income on rental properties. I prioritized paying those rental properties first as the interest on my primary residence was less. Those rentals are all paid off and can easily cover the mortgage on my primary residence.

@guycapilli546 2 жыл бұрын

Having a mortgage does have an advantage you have not spoken about. The largest percentage of my mortgage is taxes and insurance. My principal & interest is less than $400 per month, but my total payment is $846 per month. Unless you are self-disciplined for putting $4500 aside for property tax and another amount of money for insurance and an umbrella policy ($1,000,000). Having a small mortgage does make it possible to not worry about the hidden bills that pop up in owning a house.

@richardc488 2 жыл бұрын

Thanks Schmidty, I agree with you but most agents say pay house off

@phuongpham-of2fb 2 жыл бұрын

The challenge is that now inflation so high, if you borrowed money at low interest and having your money worked for you at higher rate. Then, nothing wrong with having a mortgage. Having cash is bad right now. So my parents paid off their house and yet they can't tap the money in their house to live on. Reverse mortgage isn't optimum.

@dlg5485 2 жыл бұрын

I have a fairly high risk tolerance and I do plan to carry a mortgage into retirement in a few years, even though I could pay it off using funds from my Roth account. Mine is a 15yr loan and there will be about 4 years left on it when I retire at age 62. I prefer to give that money a chance to grow in the stock market rather than paying off the house. Also, I plan to delay Soc Sec until age 70, so I will be spending a lot from a traditional IRA in those early years of retirement so the mortgage tax deduction will help to offset some of the tax on those larger distributions.

@billtisdale6122 2 жыл бұрын

Mortgage interest on a loan with 4 yrs left to go will not decrease the tax impact of withdrawal from your IRA. I’m betting even now you are in the “Standard Deduction” area on your 1040.

@bridgecross 2 жыл бұрын

Keeping the funds in your Roth rather than paying off low-interest debt is smart. Since all the growth in the Roth is tax-free, it's a better use of leveraging your time.

@dougm1985 2 жыл бұрын

you should claim SS before then , and let the money grow in the IRA. you may not ever get a dime from SS. you never know when you time is up. just saying

@dlg5485 2 жыл бұрын

@@dougm1985 That is a risk I'm not willing to take. The entire point of delaying SS, in my opinion, is to lock in a higher *guaranteed* income after age 70. I am perfectly fine taking risks with my portfolio, but that SS benefit is my safety net, in case the market really goes south.

@dlg5485 2 жыл бұрын

@@billtisdale6122 You have no idea what you're talking about since I provided no details about my mortgage nor any other aspect of my finances. I can't stand people who argue for its own sake. Besides, the tax benefit clearly is not the only reason to do carry mortgage debt, as was discussed in this very video.

@vinnyg2619 2 жыл бұрын

Great video on this topic! I am one of the people who will be carrying a mortgage in retirement, I use the reasons that were stated. My assumption is we may move at some point as we won't need such a big house but who knows what the future brings, if we move we may not have a mortgage. I just refi'd to under 3% but it is a low amount, my P&I is about $460/mo but the property taxes are high. As I see it paying off my house will not give me much financial benefit, about $5500/year. I don't feel bothered at this point by having a mortgage and I don't look at my house as a cash generating investment vehicle. Maybe if I lived somewhere where taxes were very inexpensive I may feel differently. I'm not affluent by any means but my retirement plan does include a cash position to ride out negative markets assuming they are not in a 10 year down cycle. Keeping cash is a double edged sword but I saw what happened to retirees/near retirees during the 2007/2008 downturn and they lost a lot of money by selling. I really don't know how much we will need in retirement although I have a general idea based on our expenses now and have an estimate on Medicare healthcare costs. I tend to estimate high so I think we will be OK. Yes, there's the 80% rule but I like to base my budget on actual expenses paid out. I guess the holy grail is to live as debt free as possible, sometimes it's not possible.

@billmulvihill8452 2 жыл бұрын

Good points! These people who pay off their mortgage, have no access to the money in their home, unless they sell. The majority of their payment is for taxes and insurance. If they get in a financial bind, all that money is tied up in the house and they can’t access it and may have to move because they “paid off their mortgage”,🤣

@vinnyg2619 2 жыл бұрын

@@billmulvihill8452 Everyone has a point that they can sleep at night. I don't think either way is better or worse, it's what makes a person/couple feel comfortable. At this point in my life with about 2 1/2 years to go before retirement I can't see pulling out $109K (the refi) and paying off my house; if I was 50 then maybe. I base my budget on as true to life expenses as I can, we live on 1 salary as my wife quit working 3 years ago to take care of her mother. She is not collecting SS as we don't need it at this point; I should add that I make a bit less than $100K a year so I'm not a high dollar earner. I track my expenses as close to the dollar as I can and usually my budget estimated a little high - but the money is accounted for. Not only do we pay a mortgage we also have a car loan and we are not struggling on 1 salary. Geoff's advice is very sound but some of us may be OK carrying a mortgage. How to tell if an individual or couple will be OK ... do a budget and an income calculation. That 80% rule is a good starting point but suppose it is closer to 85 or 90% but it isn't known. We've been fortunate in our life and with retirement around the corner I hope we continue to be fortunate!

@Summerdee223 2 жыл бұрын

I'm in your same boat. Real estate taxes and insurance in my state cost me more than my actual P&I and that won't go away (will actually increase as time goes by). Paying off my house won't free up much monthly income for me and gives me more flexibility. Don't get me wrong....I hit a major windfall I would pay off my mortgage in a heartbeat.

@billmulvihill8452 2 жыл бұрын

@@Summerdee223 I still wouldn’t. Where can you borrow money for less than 3%? Carry a mortgage till the day you die. Don’t let the bank lock up your money. You may need it someday….

@vinnyg2619 2 жыл бұрын

@@Summerdee223 I may be wrong but I think as long as you plan for it and can afford it, it may not be that big of a deal. Since I am not retired yet, I can only speculate... I'll find out in a couple of years.

@getsomedonkey 2 жыл бұрын

This needs to be updated to current times. Which only needs to be having a mortgage in retirement is a bad plan.

@chrisoneillstitt 2 жыл бұрын

I paid off my home two years ago but still have HOA dues and property taxes - total 700 month. So glad I paid off that mortgage. As for investing , you need to understand the market and willing to take the risk.

@HolySchmidt 2 жыл бұрын

Good point Chris

@3chunter307 2 жыл бұрын

Heck with that. How about no hoa. $950 year taxes. $700 a month is crazy.

@DoctorSmartyPants 2 жыл бұрын

Yikes. California?

@beachdiva9586 2 жыл бұрын

Good words! I sold my house in Texas 4 years ago to retire on the Mississippi Gulf Coast. My goal was to retire without a mortgage. I was able to buy a house here mortgage free with cash from the sale of my house. As for Mississippi taxes and insurance, my homeowners insurance is way more here than in Dallas, due to living in hurricane vicinity. Plus I keep a FEMA policy just in case, even though my area is not in a flood zone. My property tax was $108 for 2021, for a house with a little more square ft than in Texas. I'm living my retirement dream on the gulf coast. No mortgage, lived monthly from one of my investment accounts til age 66. I now have social security paying me monthly instead of drawing from an IRA. I learned before retirement (to live lifestyle same as when working) that later income will come as 34% pension, 33% social security and 33% personal savings. I live frugal, though, and enjoy life everyday.

@joer1678 2 жыл бұрын

I have a full retirement plus separate investments growing. I have a small mortgage with a lot of equity. We are fine as well

@cliffluxion7019 2 жыл бұрын

Thank you for the video! 63 y/o here. Refinanced primary residence last year at 2.75% for 30 years with no points or fees. Have the cash to pay it off. Invested it instead. Way ahead doing this instead of paying off the house. Way ahead. My plan had been, at one time, to pay the mortgage off. Changed that once we got to where we are. So far that seems like how we will be playing it. So far.

@ronhamm 2 жыл бұрын

Of course there are pros and cons to each position. Usually you weigh both and make an informed decision from that analysis. The X factor in the equation is which position do you prefer when SHTF, with the current federal administration, it looks very probable.

@Nemo-yn1sp Жыл бұрын

In my case, my interest and annual payment is so small, it doesn't make sense to pay it off because I can use the cash more profitably elsewhere. I had the same choice - chunk of change to pay off mortgage/related or to invest for cash flow. I went for cash flow with long-term blue chip stocks that pay the mortgage with dividends but will still be mine when the mortgage is finished. I really appreciate your videos, often watch each more than once.

@HolySchmidt Жыл бұрын

Thanks for the comment and kind worlds Nemo!

@stephenwright133 2 жыл бұрын

I’ve seen this argued from both points of view. To me it’s really about does your cashflow cover your expected expenses. Wether those expense include a mortgage or not is up to you. Generally, I have found those that don’t have investment savings (retirement accounts, soc sec, pension) for retirement that generate enough cashflow might be better served not having a mortgage as it lowers expenses. Others with investment savings that produce enough cashflow to cover expenses including a mortgage may choose to keep the mortgage. We will carry a small mortgage into retirement that is easily covered by my pension alone. We have no other debts. Then we will tap retirement accounts which are a combo of 401k, Roth, and brokerage accounts. Delaying soc sec until 70. This will cover expenses and allow us to manipulate our tax rate in our favor. We will have the option to either pay the mortgage off or let the accounts grow.

@harrymartin8019 2 жыл бұрын

good strategy. i assume you've done your projected rnd calculations, if so it's best live off your deferred accounts first without SS $, which increases ~8%/yr til 70 guaranteed ( tax mitigation) then after 72 your taxes lower in other words after usually after 62 flat line your tax liability. I've been told that it's better to have 0$ deferred by 72 better to have it in taxable accounts

@keithhogan5257 2 жыл бұрын

Good point, but delaying SS until 70, you might not live 2 see 70 !! Just saying not me, 66.6 months

@jasonbroom7147 2 жыл бұрын

I'm pretty sure it was Dave Ramsey who said that 100% of all homes that were foreclosed on had a mortgage against them. That is a risk I will not take during retirement, because I like knowing I have a place to live. The other great risk during retirement is not having adequate cash flow, so eliminating the single largest monthly expense, a mortgage payment, is a way to help alleviate any cash flow concerns. Most of the people who argue against paying off a mortgage have WAY too much house, for their income, and are so far away from being able to pay it off, that they don't want to even contemplate it, so they use "math" to justify the risk they are taking. Many of those same people will wind up having to sell that home, or even worse, take out a reverse mortgage, because a huge percentage of their net worth is tied up in that single asset. They will be forced to downsize, live with their kids or struggle with where to live...all because they bought too much house during their earning years. Pride goeth before the fall!

@martyrosa5327 2 жыл бұрын

I am one of those who will not be paying off my mortgage but fit none of the criteria you list in your post. I don't have too much house, I could pay if off if I chose to, and won't be downsizing or living with my kids. Generalizing is not very helpful when everyone has a different circumstance. Meanwhile, my net worth will be growing faster than the "pay it off" crowd for the next 30 years. I retired almost exactly 2 years ago, after COVID had crushed the stock market. I took the money that I could have used to pay off my house and put it into quality stocks, knowing that COVID would eventually end, and the stock market has returned 80% from the COVID lows. Things could have gone the other way to be sure, but if your time horizon is 30 years, investing in the market instead of paying off a mortgage is a no-brainer.

@jasonbroom7147 2 жыл бұрын

@@martyrosa5327 - You mention retaining a mortgage balance and investing with a long-term horizon as though they are mutually exclusive. When your mortgage payment is less than 10% of your net pay, and your (rather nice) home's value is far less than 10% of your net worth, it is simply foolish to gamble the equity in your home to increase your equity in other investments. In other words, it doesn't matter if you can afford to carry debt, and justify that by claiming it makes you more money to do so. If that's what you have to do in order to have significant investable assets...you're doing something wrong.

@martyrosa5327 2 жыл бұрын

@@jasonbroom7147 My equity is not at risk, my mortgage payment is small relative to my cash flow and my mortgage balance is less than 45% of the value of my home. I have the capability to pay the mortgage off and retain significant investable assets. I choose not to pay it off. When looking at a 30 year retirement horizon, the thought of taking money out of my IRA and paying taxes on it or liquidating stocks and paying capital gains and then paying off my mortgage makes absolutely no sense to me. Keeping $100,000 in the stock market earning 10% over 30 years (the long term rate of return on stocks) would increase my net worth by over $750,000 vs. the alternative of paying off my mortgage with after tax dollars. Besides, if I ever ran into trouble paying my house, wouldn't I just simply sell it to recoup my equity?

@jasonbroom7147 2 жыл бұрын

@@martyrosa5327 - I suppose this boils down to a matter of perspective. To me, having 40% of my net worth tied up in a house is a serious problem. I know this is common for folks living in certain urban areas, but it's still a problem. You mention keeping $100K in the market; I'm talking about having two or three times that amount available for investing, because it was never locked away in the place where I sleep. The way most people build wealth is incredibly simple. They eliminate all debt and then leverage their financial means to grow their equity position, while taking the least amount of risk. If you ever ran into trouble paying your mortgage, and the housing market was not in a white hot stage, like it is right now...you could lose it to foreclosure. If 40% of everything you "own" is in that house, wouldn't it be ideal if YOU actually owned it?! ;)

@martyrosa5327 2 жыл бұрын

@@jasonbroom7147 I think you may have misunderstood my post. I didn't say that my house is 40% of what I own, I said that my mortgage is less than 45% of my home's value. The equity in my home constitutes about 10% of my net worth. Because my mortgage is relatively small and at a low 3.25% rate, I don't really worry much about losing my house - it's just not a realistic scenario. For me, it is all about risk tolerance. My risk tolerance is higher than most because I have studied economic history and stock market behavior and my time horizon is long, not short like so many investors. When COVID hit, many folks panicked and sold stocks but I was buying with some of the equity of the house I just sold, knowing that pandemics don't last forever and that stocks were a fantastic value in 2020. I think it is a mistake for people to think that they "own" their house after paying off their mortgage. They still have to pay for real estate taxes (high in many states), insurance, and upkeep. Even if you pay off your house, you still have to pay those. Why not grow your net worth at a faster rate by not paying off the house? I see posts of people on this site saying they will withdraw a little extra from an IRA to pay off the house in a few more years. That makes no financial sense to me. If someone has a marginal tax rate of 15%, the return on that type of transaction is -12% - the loss of 15% to Uncle Sam offset by the savings on a 3% mortgage. If someone does not have a lot of risk tolerance, they should pay off the house -they will sleep better. But if an individual has plenty of liquid investments and good cash flow, there is nothing wrong with keeping a modest mortgage forever. The stocks go up (over the long term) and the house appreciates - win win! ;)

@howellwong11 2 жыл бұрын

It is OK as long as you have a good retirement plan. Don't retire until your retirement income is the same a 80% of your take home pay. I'm assuming that your take home pay is sufficient to cover your expenses. I'm speaking from experience and have been retired comfortably for 21 years.

@treesnmoguls 2 жыл бұрын

2000-2009 was negative for the S&P. That's all the information I needed to decide.

@ronedee 2 жыл бұрын

Personally, I don't mind having a mortgage going into retirement. After 30+ years of paying all my kids' education and living expenses, I'm not thrilled about leaving them everything I own including a paid-off home! Retirement should be comfortable and stress free. Dying indebted to a bank or financial institution isn't a problem for me. Struggling to make dividends and payoff my home with my "earned" disposable income feels like adding insult to an already overly generous history..... Here's how it's done: Assuming your home is paid for or close to it, borrow against your home to the tune of approximately 60-80% of it's value. Put the money in a Living Trust/MAPT and use it to pay back the mortgage over time. Use your income to enjoy yourself and do what you want for the rest of your life. If Life throws a curve health-wise, your Living Trust will protect you and your finances. When you pass, if married, your spouse will be protected. When she passes your designated Trustee(s) will have the option to payoff your home and/or sell it and keep it.

@susanshopsabout943 2 жыл бұрын

Well, when u start taking Medicare at 65 … Medicare premiums are now tiered to your MAGI which includes investment income, income from 401k/IRA withdrawals. There are not many deductions u can take. At least u can deduct mortgage interest of $10k to hopefully lower your Medicare Part Premiums.

@bruceanderson8179 2 жыл бұрын

We entered retirement debt free. Not having a mortgage was instrumental in our ability to manage our finances in such a way that we had very low cost health insurance and zero tax liability for the first three years of retirement. After those three years we were Medicare eligible and we initiated income streams (SS benefits and some modest pensions). If we had a mortgage upon entering retirement we would have needed additional income which would have had an adverse effect on our health insurance costs and tax liability.

@thomasjacques5286 2 жыл бұрын

At 2.38% VA fixed, I'm laughing all the way to the bank. I'm also retired military so a small portion of my retired pay covers the mortgage, our SS, IRA's and some other pensions are all icing on the cake. .