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Old 11-03-2018, 09:16 AM
 
Location: RVA
2,172 posts, read 1,271,519 times
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Quote:
Originally Posted by Perryinva View Post
I don’t know where they got their numbers. The ratio of age 67 to 62 on their table is only 1.2. On my actual numbers from SSA it is 1.44. Huge difference.
Nightingale212 has the same ration as mine, also based on her actual numbers. I don’t have much use for most all of MFs self serving sales “articles”. Good example here.
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Old 11-03-2018, 09:24 AM
 
Location: SoCal
13,306 posts, read 6,369,679 times
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Quote:
Originally Posted by Perryinva View Post
People often criticize what they perceive as unusual or even difficult to achieve, whether it is a simple statement of fact or not. Some people criticize the “fact” that many choose to have a mortgage in retirement, even though the note could be easily paid off. I have been net positive for the last 12 years investing the money that could have paid off the mortgage, and as low as low rates are available, it makes perfect sense to me. (Currently though, they are a bit too high.). But it makes little sense to me to pay off a 3.5% mortgage when that money consistently earns more than that. But I cannot tell you how many times I hear “You know, you shouldn’t have a mortgage in retirement.”
I know, I still have a mortgage at 3.5%(being retired for nearly 3 years now). I thought it was a steal. But you see a lot of people from BoggleHead Forum would pound their chest proudly and said they are mortgage free. 2013 my investment returned nearly 30%, at least on one account anyway. It’s seem insane to payoff for the sleep well factor. I wouldn’t not sleep very well if I did pay it off. I would kick myself for being stupid. Now mortgage rate is nearly 5%.
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Old 11-03-2018, 09:40 AM
 
8,870 posts, read 5,149,988 times
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Quote:
Originally Posted by Perryinva View Post
People often criticize what they perceive as unusual or even difficult to achieve, whether it is a simple statement of fact or not. Some people criticize the “fact” that many choose to have a mortgage in retirement, even though the note could be easily paid off. I have been net positive for the last 12 years investing the money that could have paid off the mortgage, and as low as low rates are available, it makes perfect sense to me. (Currently though, they are a bit too high.). But it makes little sense to me to pay off a 3.5% mortgage when that money consistently earns more than that. But I cannot tell you how many times I hear “You know, you shouldn’t have a mortgage in retirement.”
I think keeping a 3.5% mortgage while investing your surplus is a smart move.
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Old 11-03-2018, 10:10 AM
 
13,979 posts, read 7,446,942 times
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Quote:
Originally Posted by NewbieHere View Post
I know, I still have a mortgage at 3.5%(being retired for nearly 3 years now). I thought it was a steal. But you see a lot of people from BoggleHead Forum would pound their chest proudly and said they are mortgage free. 2013 my investment returned nearly 30%, at least on one account anyway. It’s seem insane to payoff for the sleep well factor. I wouldn’t not sleep very well if I did pay it off. I would kick myself for being stupid. Now mortgage rate is nearly 5%.

It kind of depends on what your income stream and job stability in your last work years look like. In my case, I started hitting massive high tech job instability 10 years ago at age 50. I've seen 2 1/2 years of income gaps over those 10 years. Having a low cost of ownership and paid-for roof over my head no matter what happened was a priority. I've had to contingency plan for "Geoff never works again" since age 50. It was pretty ugly then. At age 60, it's not the cash flow I'm used to but I'd be comfortable. When you have that hanging over your head, you get conservative. I've structured things so I'd be fine on my defer-to-70 Social Security income of $43,524/year that would have minimal tax burden. My retirement portfolio and other assets would be entirely discretionary spending.


I'd also point out that the stock market doesn't go up forever. It's been a really good run but the odds of 2019/2020 looking like the last half-dozen years is pretty unlikely. You can land yourself in a real sequencing problem if you don't take some of the profit.
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Old 11-03-2018, 10:17 AM
 
Location: SoCal
13,306 posts, read 6,369,679 times
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Quote:
Originally Posted by GeoffD View Post
It kind of depends on what your income stream and job stability in your last work years look like. In my case, I started hitting massive high tech job instability 10 years ago at age 50. I've seen 2 1/2 years of income gaps over those 10 years. Having a low cost of ownership and paid-for roof over my head no matter what happened was a priority. I've had to contingency plan for "Geoff never works again" since age 50. It was pretty ugly then. At age 60, it's not the cash flow I'm used to but I'd be comfortable. When you have that hanging over your head, you get conservative. I've structured things so I'd be fine on my defer-to-70 Social Security income of $43,524/year that would have minimal tax burden. My retirement portfolio and other assets would be entirely discretionary spending.


I'd also point out that the stock market doesn't go up forever. It's been a really good run but the odds of 2019/2020 looking like the last half-dozen years is pretty unlikely. You can land yourself in a real sequencing problem if you don't take some of the profit.
Very good point, and I agree with your post. Except some people who mentioned they paid off on Bogglehead never mentioned job insecurity was the reason to pay off.

But for some retirees, they do have the savings to pay off the mortgage, they just don’t pay it off. It’s not necessarily you must do it to retire mantra. It also depends on one’s income stream.
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Old 11-04-2018, 03:43 AM
 
Location: Mount Airy, Maryland
10,484 posts, read 5,944,584 times
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Quote:
Originally Posted by NewbieHere View Post
Very good point, and I agree with your post. Except some people who mentioned they paid off on Bogglehead never mentioned job insecurity was the reason to pay off.

But for some retirees, they do have the savings to pay off the mortgage, they just don’t pay it off. It’s not necessarily you must do it to retire mantra. It also depends on one’s income stream.
It also depends on the market. The guy who paid off his mortgage in 2000, right before a 3 year bear of double digit losses, was much better off. We are at the end of a very long bull, there is always a chance we are looking at the year 2000 again soon.
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Old 11-04-2018, 03:56 AM
 
71,811 posts, read 71,896,917 times
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over the long term it rarely is going to pay to pay it off for investors . especially since rates are still historically low.

but people tend to go with "feeling good " vs what makes more financial sense in the long run
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Old 11-04-2018, 05:26 AM
 
Location: RVA
2,172 posts, read 1,271,519 times
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Exactly. In 2000 my rate was not good (7.5%, IIRC) and since back then, I couldn’t have paid it off if I wanted too, I accelerated payments accordingly, as that was my best ROI. Amusingly, it was only about a $100k mortgage back then, but I only had 401k as savings in those days. I’ve moved 3 times since then, buying fixer uppers and earning a lot of sweat equity, and significant RE appreciation in each sale. I realized that investing was the only way to get really ahead, and changed things accordingly. I’ve refinanced at least 8-10 times as rates dropped. Once I got in the low 4%, I stopped accelerating payments and instead increased investments. I just moved a few weeks ago, in what I hope is the last for a very very long time. At 60, I now have the highest amount mortgaged I’ve ever had, but could easily pay it off if wanted.

Thanks to my investment savings and income increases, with LBYM, over the last almost 20 years, (and a healthy pension) the P&I are not even 25% of my projected guaranteed monthly fixed income, once I retire in 16 months, and far less than even just my investments generate today. A lot has been good fortune coupled with a financial and career plan that has worked.

It matters not if there is a bear market for even a few years, as the net long term investment ROI is still greater than my mortgage rate. The new house will appreciate the same with or without a mortgage and if paid off, that amount is tied up in the house, doing nothing except leaving more to my heirs, which is not an objective.
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Old 11-04-2018, 08:08 AM
 
8,870 posts, read 5,149,988 times
Reputation: 10159
Quote:
Originally Posted by Perryinva View Post
Exactly. In 2000 my rate was not good (7.5%, IIRC) and since back then, I couldn’t have paid it off if I wanted too, I accelerated payments accordingly, as that was my best ROI. Amusingly, it was only about a $100k mortgage back then, but I only had 401k as savings in those days. I’ve moved 3 times since then, buying fixer uppers and earning a lot of sweat equity, and significant RE appreciation in each sale. I realized that investing was the only way to get really ahead, and changed things accordingly. I’ve refinanced at least 8-10 times as rates dropped. Once I got in the low 4%, I stopped accelerating payments and instead increased investments. I just moved a few weeks ago, in what I hope is the last for a very very long time. At 60, I now have the highest amount mortgaged I’ve ever had, but could easily pay it off if wanted.

Thanks to my investment savings and income increases, with LBYM, over the last almost 20 years, (and a healthy pension) the P&I are not even 25% of my projected guaranteed monthly fixed income, once I retire in 16 months, and far less than even just my investments generate today. A lot has been good fortune coupled with a financial and career plan that has worked.

It matters not if there is a bear market for even a few years, as the net long term investment ROI is still greater than my mortgage rate. The new house will appreciate the same with or without a mortgage and if paid off, that amount is tied up in the house, doing nothing except leaving more to my heirs, which is not an objective.
If I ever buy another house, I will almost certainly ise a reverse mortgage in order to keep as much of my capital liquid and invested as possible.
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Old 11-04-2018, 08:17 AM
 
71,811 posts, read 71,896,917 times
Reputation: 49370
we looked in to a reverse mortgage to purchase at one time . to be honest that terms are so poor and the interest rate and fees that eat up whatever equity you have are so high , that in good conscious i could not do it . it really is a crappy deal .

it sounded so good to just buy a place , put down half and never make a mortgage payment, but it really was awful terms .
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