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that is correct and my point , having the money tied up in a house can be pretty miserable in retirement if you need cash. if we didn't have enough liquidity left i would never be paying cash for our co-op
I have to say I disagree with those who say to keep the mortgage and invest the money after retirement. I will not retire until our mortgage is paid. Our mortgage is our biggest monthly expense and to have it hanging over our heads when we retire and our income becomes limited (and likely less) is way too much to deal with. Retirement should be about enjoying your new found freedom. How can someone do that when they have a major debt hanging over their head and are living on a limited income? Retirement is more than just a simple numbers game of making the most money. Not everyone is financially smart enough to make good financial decisions and keep making them for the remainder of their life. It should be about what is best for you and peace of mind is a big part of that IMHO. Jay
Liquidity, Liquidity, Liquidity would you really want to be retired with no liquid assets when you could have some?
Ok, I did not literally mean $0 in cash, total. I meant that there might be liquid assets elsewhere in addition to the $200k, but they are not part of the analysis since whatever happens to them is independent of your decision to pay the mortgage off or not.
Obviously having $0 remaining would be bad, this is not under dispute.
ncole1,
For some unknown reason the firecalc simulator just does not seem to work anymore. Perhaps I am doing something wrong but it keeps adding inflation to the $11.1K annual amount. I changed the interest rate from 3.0% to 0% but that does not seem to work. I even tried a 10% inflation rate but that did not change the outcome. I will look at this again some other time.
Being debt free means nothing to me. I am interested in growing my income and net worth.
That attitude depends on your age and personality. Once you are so FI that your income handily out strips your debt then it may be that your only relaxation is growing net worth. Or during your earning and savings years, that is an often smart aggressive way to become rich. Often, it is the only way to become rich. But for the vast majority that have a goal of "enough", the relief from all the long term planning, sacrifice, and unknowns is almost as valuable as the actual payoff off living in that frame. Like me. My "enough" is far less than many and far more than most. I have been lucky most of my life. No complaints...but I'd sure be pissed if i died at 65...
I have to say I disagree with those who say to keep the mortgage and invest the money after retirement. I will not retire until our mortgage is paid. Our mortgage is our biggest monthly expense and to have it hanging over our heads when we retire and our income becomes limited (and likely less) is way too much to deal with. Retirement should be about enjoying your new found freedom. How can someone do that when they have a major debt hanging over their head and are living on a limited income? Retirement is more than just a simple numbers game of making the most money. Not everyone is financially smart enough to make good financial decisions and keep making them for the remainder of their life. It should be about what is best for you and peace of mind is a big part of that IMHO. Jay
Bolding is mine. The OP said that their pensions and SS are sufficient to meet their monthly expenses, including their mortgage. The $200K is over and above that. So their income is not limited, at least not any more than anyone else's. They're already covering their monthly nut. The question is if your monthly expenses are met, what to do with the EXTRA $200K, pay off mortgage or invest? I really think this is a question of what the OP's risk tolerance is. He said that he is pretty much risk averse (bird in the hand type, as he put it). I think it is a question really regarding his peace of mind. I think we all have points where we have to choose between more money, or more...something else (time, security, whatever). For security...pay it off. For more money, invest in something with a decent return. I think with OP's admitted aversion to the risks of stocks, go ahead and pay it off. For others (me included), invest away.
ncole1,
For some unknown reason the firecalc simulator just does not seem to work anymore. Perhaps I am doing something wrong but it keeps adding inflation to the $11.1K annual amount. I changed the interest rate from 3.0% to 0% but that does not seem to work. I even tried a 10% inflation rate but that did not change the outcome. I will look at this again some other time.
When you are on the home page for FIREcalc, look near the top, you'll see several tabs. Click on the tab called "Spending Models". Near the top, you will see a selection for inflation options: PPI, CPI, or a specified annual rate. Choose the specified annual rate option, and enter 0.0%.
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