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Old 11-11-2011, 08:50 AM
 
1,061 posts, read 1,642,055 times
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Quote:
Originally Posted by Wwanderer View Post
No criticism of you personally intended, but any boomer, especially an early boomer, who still needs to have a mortgage is in big trouble.
I would disagree entirely. Given today's interest rates and the fact that houses are not really an investment but a drain, I would be foolish to ever pay off my house. I was born in 1953 and was very close to paying off my house last year after purchasing it 6 years before. Based upon the equity that I had tied up in my property which was locked in place and therefore not useful to me, it made much more sense to do a cash out refi and pull out my hundreds of thousands of $ in equity which I was then able to put toward a better use, ownership of the land on which I will be building my retirement home in the Southwest. I own the land free & clear and it functions as a down payment for the construction of my home.

When I build that home, I plan to finance it rather than withdraw retirement money to do so. I have saved & invested well and have well into 7 figures of retirement money available to me. Good thing since I have no pension after 25 years of working for that onetime juggernaut Nortel (my beloved Northern Telecom). The cheap money available and the tax advantages of financing far outweigh draining down any of the principal to build that house. Make that equity a liquid part of your retirement assets.

We live in a different world now which calls for different strategies to ensure financial health in the future as we age. What does owning your home free & clear do for you? Granted you have no mortgage payments but you can't take it with you. Mortgage it and use the money to your advantage while money is still cheap, provided you have the wherewithal to make the monthly payments.

Last edited by DurangoJoe; 11-11-2011 at 08:59 AM..
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Old 11-11-2011, 10:16 AM
 
2,912 posts, read 3,551,245 times
Reputation: 4103
Quote:
Originally Posted by Ketabcha View Post
One thing of interest to me is the job tenure of Boomers and particularly the first wave. I was born in the first years of the Baby Boom. My father instilled in me a dedication to my job. We boomers, for a large part, stayed with our first serious jobs. . . .

I was fortunate to be hired by a federal agency and I stuck with that job for 37 years. As a result I am very comfortable in my retirement. But, I earned it by staying with the same employer for all those years.

These days I see the current generation job jumping a lot. It goes against my grain to do that but I do understand it because there are greener fields for professional advancement and they are moving into better jobs. It does seen that for a lot of those "kids" it is all about money. In my day it was about just having a job.
Not everyone has the privilege of staying with an employer as long as he or she would like. The world has changed a great deal, and layoffs are rampant even at companies making huge profits. For example, I believe that the once-great IBM is now in a state of perpetual layoff, despite gigantic profits and stupendous executive salaries, as they transfer as many jobs as they can out of the USA and into India, China, Brazil, and other low-wage countries. Also, staying with the same private-sector employer for a working lifetime doesn't necessarily result in a decent pension anymore. I believe that many companies like IBM have ended their traditional defined-benefit pensions. In any case, most private-sector pensions have never had any mechanism for inflation adjustments.
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Old 11-11-2011, 10:47 AM
 
15,149 posts, read 19,771,420 times
Reputation: 21344
Quote:
Originally Posted by Ketabcha View Post
My father instilled in me a dedication to my job. We boomers, for a large part, stayed with our first serious jobs.... I was fortunate to be hired by a federal agency and I stuck with that job for 37 years. As a result I am very comfortable in my retirement. But, I earned it by staying with the same employer for all those years.

I'm with you, Ketabcha. Same work mentality and same luck in falling into a career. I wasnt fortunate enough to work for the same company for 37 years but I never left a job (all my employers, except the last one, went out of business) and was with my last one for 20 years. And I was fortunate that my last company offered a pension; they ceased doing so right after I retired.
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Old 11-11-2011, 11:23 AM
 
Location: Los Angeles area
14,018 posts, read 17,747,361 times
Reputation: 32309
Quote:
Originally Posted by newenglandgirl View Post
Some people have no sense of humor....
Too bad you are not able to ask anyone who knows me personally about my sense of humor. My great sense of humor is one salient characteristic of mine.

What we differ about is whether reading about the particular unethical behavior in question, which even you admitted you wouldn't engage in yourself because you "don't have that ethic", would be "fun" or not. It's a shame you chose to take that point of disagreement and broaden it into a more generalized attack.
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Old 11-11-2011, 11:46 AM
 
Location: Los Angeles area
14,018 posts, read 17,747,361 times
Reputation: 32309
Quote:
Originally Posted by SoButCounty View Post
I would disagree entirely. Given today's interest rates and the fact that houses are not really an investment but a drain, I would be foolish to ever pay off my house. I was born in 1953 and was very close to paying off my house last year after purchasing it 6 years before. Based upon the equity that I had tied up in my property which was locked in place and therefore not useful to me, it made much more sense to do a cash out refi and pull out my hundreds of thousands of $ in equity which I was then able to put toward a better use, ownership of the land on which I will be building my retirement home in the Southwest. I own the land free & clear and it functions as a down payment for the construction of my home.

When I build that home, I plan to finance it rather than withdraw retirement money to do so. I have saved & invested well and have well into 7 figures of retirement money available to me. Good thing since I have no pension after 25 years of working for that onetime juggernaut Nortel (my beloved Northern Telecom). The cheap money available and the tax advantages of financing far outweigh draining down any of the principal to build that house. Make that equity a liquid part of your retirement assets.

We live in a different world now which calls for different strategies to ensure financial health in the future as we age. What does owning your home free & clear do for you? Granted you have no mortgage payments but you can't take it with you. Mortgage it and use the money to your advantage while money is still cheap, provided you have the wherewithal to make the monthly payments.
I can see that your thoughtful analysis makes sense for your particular situation. However, many people who are near retirement or have already retired do not have anything better to do with the money. I am one of the latter. I am already living in my retirement home, which is paid off, and I plan to die here. My income is quite adequate to do all the things I want to do, so I have no need to take the equity out and probably never will have. If something were to change radically, although I can't imagine what that might be, I can always do so, even if the cost of money has risen by then.

Isn't the problem in these kinds of discussions is that many of us tend to make a general principal out of that which is working for us, or which has worked for us in the past? Even if the general principal is widely applicable, it will probably not be applicable to everyone, as you have so aptly argued. Having a paid-off home lowers the amount of income needed in retirement and is one method of leaving something to heirs. If one doesn't care about leaving anything, then that takes away that one factor, and of course there are other ways to accomplish it besides home equity anyway.
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Old 11-11-2011, 12:43 PM
 
Location: The Triad (NC)
28,500 posts, read 62,217,072 times
Reputation: 32187
Quote:
Originally Posted by Wwanderer
No criticism of you personally intended,
but any boomer, especially an early boomer, who still needs to have a mortgage is in big trouble.
Quote:
Originally Posted by SoButCounty View Post
I would disagree entirely. Given today's interest rates and the fact that houses are not really an investment but a drain, I would be foolish to ever pay off my house.
You're describing a choice that you are able to have.
The point Wwanderer makes is still valid for most, perhaps too many:
the home still represents the single largest pool of wealth they'll ever have
and NOT having that encumbered by a mortgage is critically important.

For those able to exercise other choices... for cash management or other financial reasons?
Good for them but that is a different discussion
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Old 11-11-2011, 02:50 PM
 
1,061 posts, read 1,642,055 times
Reputation: 1933
Quote:
Originally Posted by Escort Rider View Post
I can see that your thoughtful analysis makes sense for your particular situation. However, many people who are near retirement or have already retired do not have anything better to do with the money. I am one of the latter. I am already living in my retirement home, which is paid off, and I plan to die here. My income is quite adequate to do all the things I want to do, so I have no need to take the equity out and probably never will have. If something were to change radically, although I can't imagine what that might be, I can always do so, even if the cost of money has risen by then.

Isn't the problem in these kinds of discussions is that many of us tend to make a general principal out of that which is working for us, or which has worked for us in the past? Even if the general principal is widely applicable, it will probably not be applicable to everyone, as you have so aptly argued. Having a paid-off home lowers the amount of income needed in retirement and is one method of leaving something to heirs. If one doesn't care about leaving anything, then that takes away that one factor, and of course there are other ways to accomplish it besides home equity anyway.
Which is why I stated "if you have the wherewithal to make the monthly payments".

Paying off a mortgage does indeed lower the amount of income needed in retirement. The other side of that story is that if you pay it off out of your nest egg, you have less of a nest egg if times get hard. Those of us close to retirement are planning to ensure we don't run out of money during our lifetimes. Personally, I'd rather have that "equity" in the form of liquid assets that can be used without having to sell my home to get to them. Not for everybody, but the point is that conventional wisdom has always been to pay off your home and live mortgage free in retirement. That's no longer always the case given the low cost of borrowing these days.
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Old 11-11-2011, 02:54 PM
 
1,061 posts, read 1,642,055 times
Reputation: 1933
Quote:
Originally Posted by MrRational View Post
You're describing a choice that you are able to have.
The point Wwanderer makes is still valid for most, perhaps too many:
the home still represents the single largest pool of wealth they'll ever have
and NOT having that encumbered by a mortgage is critically important.

For those able to exercise other choices... for cash management or other financial reasons?
Good for them but that is a different discussion
And how do they access that wealth if they need it?

Once again, I'm not prescribing that it works for everyone, but what I am saying is that times are different than they used to be & the traditional conventional wisdom no longer always applies.
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Old 11-12-2011, 06:18 AM
 
29,782 posts, read 34,880,403 times
Reputation: 11705
Quote:
Originally Posted by Escort Rider View Post
I can see that your thoughtful analysis makes sense for your particular situation. However, many people who are near retirement or have already retired do not have anything better to do with the money. I am one of the latter. I am already living in my retirement home, which is paid off, and I plan to die here. My income is quite adequate to do all the things I want to do, so I have no need to take the equity out and probably never will have. If something were to change radically, although I can't imagine what that might be, I can always do so, even if the cost of money has risen by then.

Isn't the problem in these kinds of discussions is that many of us tend to make a general principal out of that which is working for us, or which has worked for us in the past? Even if the general principal is widely applicable, it will probably not be applicable to everyone, as you have so aptly argued. Having a paid-off home lowers the amount of income needed in retirement and is one method of leaving something to heirs. If one doesn't care about leaving anything, then that takes away that one factor, and of course there are other ways to accomplish it besides home equity anyway.
Yup, retirement is no different than your working years it all depends on your income flow and your espenses. That gives everyone different circumstances and options.
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Old 11-12-2011, 10:40 AM
 
Location: Around the UK!
156 posts, read 110,638 times
Reputation: 410
Quote:
Originally Posted by Hamish Forbes View Post
Not everyone has the privilege of staying with an employer as long as he or she would like. The world has changed a great deal, and layoffs are rampant even at companies making huge profits. For example, I believe that the once-great IBM is now in a state of perpetual layoff, despite gigantic profits and stupendous executive salaries, as they transfer as many jobs as they can out of the USA and into India, China, Brazil, and other low-wage countries. Also, staying with the same private-sector employer for a working lifetime doesn't necessarily result in a decent pension anymore. I believe that many companies like IBM have ended their traditional defined-benefit pensions. In any case, most private-sector pensions have never had any mechanism for inflation adjustments.
Unfortunately many boomers didn't do the math and work out that many political and commercial promises that they naively believed, were were just a "pipe dream". The concept of sustainable defined benefit pension funds based on last salary earned is one of these. Retiring in comfort at age 65 is another. The numbers just don't work.

Spending more than you (individual, town, city or country) make will always lead to unpleasant consequences for someone. And inflated expectations will lead to disappointment.

The reality is that our boomer generation has made a real mess of the world ... they are now starting to realise this and live with some of the painful consequences.
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