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I went from home ownership to renting in retirement. If you plan things correctly during your working years, making housing payments in retirement isn't overwhelming.
Quote:
Originally Posted by mathjak107
same …that money no longer tied up in a house pays for not only our rent but most of our living expenses too as it has grown from where we even started retirement at besides paying our bills
It's quite dependent on each investor's unique situation.
For example, let's say I could sell my no-mortgage vacation house and clear $5 million after closing costs, fees, taxes etc. Let's say I could invest that $5 million in relatively risk-free laddered CDs and get 5% or $250,000 per year. But after Uncle Sam's share of that new interest income, I only have about $157,500 after tax. Now, to rent this home from its new owner, my rent would be, say, $20,000 per month for a total of $240,000 per year.
In my hypothetical I'm ahead to stay an owner rather than become a renter. Of course, others have a different situation.
It's quite dependent on each investor's unique situation.
For example, let's say I could sell my no-mortgage vacation house and clear $5 million after closing costs, fees, taxes etc. Let's say I could invest that $5 million in relatively risk-free laddered CDs and get 5% or $250,000 per year. But after Uncle Sam's share of that new interest income, I only have about $157,500 after tax. Now, to rent this home from its new owner, my rent would be, say, $20,000 per month for a total of $240,000 per year.
In my hypothetical I'm ahead to stay an owner rather than become a renter. Of course, others have a different situation.
investing in cds wouldnt be worth it to be blunt ... investing in assets that may not be taxable until you sell or subject to long term capital gains with potential for double digit average returns and now we are talking
To me the answer to the OP’s question depends on these factors:
â—† interest rate on the mortgage, and it should be a fixed rate
◆ interest rate on your investments, together with the likely projected future growth rate — you must be realistic about this
â—† monthly cash earned by your investments needs to cover all your monthly expenses for your foreseeable future
â—† amount of mortgage principal (all debt, really) should be such that your assets can cover all debt on your last day on this earth
As long as the rate on your investments is nicely higher than your mortgage, why pay it off? In this situation your net cashflow is positive, so don’t pay off the mortgage. Doing so could be a financial disadvantage.
It is very considerate to leave this earth such that your assets can cover all your debts. Doing otherwise would not be very nice.
I am 61, my wife 60. I enjoy my job and plan to work on my terms once I hit 65, and plan to continue until at least 70 because, again, I really enjoy it.
We moved to North Carolina from NJ 2 years ago. Before we did, we felt it best to make sure whatever mortgage we were going to take would work well into our retirement years.
We did an exercise with a retirement calculator taking into account that working plan and waiting until 70 to claim SS. We figured in our investments with the lower end interest, plus a small pension. Added them together if I decide to completely stop working at 70. Took that number, plus the profit from the NJ home, and decided on a mortgage total (with taxes and fees) that we would be very comfortable to support and still enjoy our lives as we wish. That helped us choose how much we wanted to spend on our final home buy. Had some left over and invested that amount.
So yes, you can retire with a mortgage. But it will take honesty, a good plan, help if necessary from a financial planner, and some homework.
I still have a mortgage but the plan is to totally pay it off by January 1, 2024 just four months down the road.
Reason I have a mortgage is we sold our old home down south, moved to a higher cost of living area where homes sold for twice what we sold our old home for so we got what we wanted but had to take out a small mortgage.
I still work full tie so for the past 34 months we have been paying extra every month.
The plan is to retire on January 1, 2024 right after I turn 75 years old.
Mortgage is $741.57 but of that amount $315.18 is taxes and insurance so paying off the mortgage would save around $426.00 so it wouldn't be the end of the world if we didn't pay it off.
But I want to pay it off for if something happens to me I want my wife to live in a debt free house.
I could pay the house off tomorrow but I do not want to dig into any savings whatsoever.
If one is low income, how do they go about paying the house off? And if they do somehow have the income/assets to pay it off, it wouldn't be OK to instead have a mortgage and put the money that would have been used to pay the house off in an emergency fund instead?
If one is low income, how do they go about paying the house off? And if they do somehow have the income/assets to pay it off, it wouldn't be OK to instead have a mortgage and put the money that would have been used to pay the house off in an emergency fund instead?
We've been low income our whole life, sometimes poverty level. We did both but didn't start saving until I was about 44 yrs old. My husband is 62, I am 55 yrs old. He has a small business but only works seasonally.
This is what I did:
-I worked for a Supportive living Agency. I worked Wed 3pm to Fri 9:30am. I was off Thursdays 9am-3pm so this was Two 18 hr shifts. Paid about $1 more than min. wage. Job provided a 4% match and Medical, dental and overtime on holidays or if I worked more that week. I chose a specific client. She My loved thrift stores so we''d shop together. I'd buy items for my ebay store while with her. After she fell asleep, I would list the items online. We were given a private room & bathroom. If you can combine two jobs at once, it does help. It added about $3 per hr to my job. I was paid $1 more than minimum wage.
-I just got a new job a few weeks ago. am at work right now. I care for an 85 year old lady who is very healthy but she endures dementia. She can do most everything for herself. The shift is Wed Noon to Fri Noon, a 48 hr shift per week. No overtime but the pay is $25 per hr. This is $9.50 above min wage and I am paid to sleep. She is an easy lady. No benefits. This is probably the best job I've ever had so expect it to last another 5 yrs. She is very healthy for her age.
My husband has a small business but he doesn't make much $. He is 62, I am 55. He is very handy though...he fixes all of our cars and anything that goes wrong in the house.
We've been low income our whole life, sometimes poverty level. We did both but didn't start saving until I was about 44 yrs old. My husband is 62, I am 55 yrs old. He has a small business but only works seasonally.
This is what I did:
-I worked for a Supportive living Agency. I worked Wed 3pm to Fri 9:30am. I was off Thursdays 9am-3pm so this was Two 18 hr shifts. Paid about $1 more than min. wage. Job provided a 4% match and Medical, dental and overtime on holidays or if I worked more that week. I chose a specific client. She My loved thrift stores so we''d shop together. I'd buy items for my ebay store while with her. After she fell asleep, I would list the items online. We were given a private room & bathroom. If you can combine two jobs at once, it does help. It added about $3 per hr to my job. I was paid $1 more than minimum wage.
-I just got a new job a few weeks ago. am at work right now. I care for an 85 year old lady who is very healthy but she endures dementia. She can do most everything for herself. The shift is Wed Noon to Fri Noon, a 48 hr shift per week. No overtime but the pay is $25 per hr. This is $9.50 above min wage and I am paid to sleep. She is an easy lady. No benefits. This is probably the best job I've ever had so expect it to last another 5 yrs. She is very healthy for her age.
My husband has a small business but he doesn't make much $. He is 62, I am 55. He is very handy though...he fixes all of our cars and anything that goes wrong in the house.
I guess I should have phrased my question differently. You said that for low income, their house should be paid off. What is wrong with a low income person having a mortgage and using the money that would have gone to paying for the house in an emergency fund to be used for whatever life throws at them? That is, of course, if they are comfortable with a mortgage and can get one at a reasonable rate.
MQ, because I have security issues from some past bad experiences I wanted to live in a secure building where you need to be buzzed in. It’s 3 stories and I am on the top floor. I have the best view as I face the courtyard with a long view and no one looks onto my balcony and I am away from the pool.
I recently had it enclosed with a wall of glass and I can open the windows for fresh air. I start and end every day reading there and it also increases my square footage. My view is mature trees, bushes and grass.
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