Should You Delay Retirement Until Your Home is Paid Off? (marriage, 2015)

[Hefe]

Originally Posted by pll

Is it still possible to retire with a mortgage? How?

The answer is: "Depends."

How high is the mortgage interest rate? If your IRA/401K is doing better than that & it's just a few years to go, why not? My mom, who was short of funds, always just refinanced her mortgages if it would give her a smaller monthly payment... always had a mortgage in her 94 years as long as her monthly payments were doable.

I took the opposite route. I set my mortgage to be satisfied at 65yo (when I figured I would have enough saved for retirement). When I accepted a buyout 2 years earlier than that, after about 6 months I simply paid it off with a lump sum.

It was an emotional choice since my retirement investments were making more than the mortgage interest rate but I wanted the firm knowledge that I owned my condo free & clear no matter what happened next. (Important to note that it was a condo not a sfh & I got it originally at a good price so it wasn't a particularly big lump sum.)

[Listener2307]

Should You Delay Retirement Until Your Home is Paid Off?

We accelerated payments so that our home would be paid for. We retired in 2010, with a seamless retirement - that means took just as much home after retirement as we did when we were working.

[BigfishTim]

Another way of looking at this.

Say we owe $300K in our mortgage with a 2.5% mortgage rate. We also have $300K cash.

We could pay off the loan and feel more secure emotionally, or we could put the $300K in the T-Bill that yields 5% interest.

Let's also say we have 15 years left on our loan. Assuming the inflation rate at 2% a year, and we get paid by inflation-adjusted income from SS. At the end of 15 years, I am paying off the $300K which is worth far less with my inflation-adjusted dollar. So the loan gets cheaper as times go by.

What would you do?

[ChessieMom]

Originally Posted by pll

Is it still possible to retire with a mortgage? How?

Of course it is. It simply depends on your retirement income. I retired last year and I still pay my mortgage every month.

[StealthRabbit]

Originally Posted by jaxrivers

That's a different topic. Nothing to do with carrying a home mortgage in retirement.

Let me simplify for you

OP's question...

Is it still possible to retire with a mortgage? How?

What is OP's reluctance / barrier to carrying a mortgage during retirement? (We don't know, so have to presume)

Most likely cash flows. (Retirement = going from accumulation and paychecks to> Distribution / spend-down.

so.... figure out any of a hundred ways to mitigate that change from inflows to outflows. (Reposition your available retirement assets) BTDT several times during my first 20 yrs of retirement, expect to do it several more times during my next 30 yrs of retirement.

or... (and many here have mentioned)...

Consider that $500k of 'paid-off' house is providing you shelter at a nominal cost + Taxes. + insurance + maint + repairs + Opportunity costs*

$500k dutifully invested in the correct Real Estate Asset could be spinning off 10-12% triple net INCOME (NNN)* for you. ie. Pumping $5,000/ month into your retirement INCOME / positive cash flows...(*No property taxes, no property insurance, no Maint costs)

What / where (free to relocate anywhere in the world at any time) could you rent an adequate abode for $5,000/ month? No taxes, No maint, No repairs, No responsibility, ~ 1/4th the insurance spend. Likely you would have $2-$3k extra per month for 'incidentals'

No ONE formula is best for all.

.I was SHOCKED that my downstairs neighbors had just purchased with a mortgage at age 70.

BTW: my mom got a 30 yr mortgage on an executive flip home, at the age of 88. It's long gone by now, but the $500k tax free gain is banked. It was her 8th flip home (after retiring). ... her version of 'Repositioning her assets' during retirement.

[ddeemo]

Originally Posted by pll

Is it still possible to retire with a mortgage? How?

Of course it is - just depends on the circumstances. We have enough money to retire our mortgage several times over but tax consequences would make that a poor decision.

[Wile E. Coyote]

Originally Posted by moguldreamer

Of course, others have a different situation.

I am an others. I think there are other others. Take a couple zeros off and the math is pretty much the same and unfavorable to rent something equivalent.

[Wile E. Coyote]

Originally Posted by mathjak107

i always try to explain to people all tge time that what your income was when you had a pay check or two coming in while working is irrelevant when the checks stop .

most of use what we have to work with when the time gets close and back into the expenses .

sometimes things have to go or be cut ..sometimes it even means relocating

your friends rent was $1,000 more than yours.

yeah, mj, one must do what one must do.

if you want to stay near friends then maybe downsize and / or move a few miles out of the core. not necessarily a cross country move.

[mathjak107]

Originally Posted by Wile E. Coyote

your friends rent was $1,000 more than yours.

yeah, mj, one must do what one must do.

if you want to stay near friends then maybe downsize and / or move a few miles out of the core. not necessarily a cross country move.

nope , pretty much the same..

there problem was they owned more house then they could afford …they were forced to sell in 2009 when he lost his job …

so they got out with what they could and rented ..

the leased expensive cars along with that house they bought as well.

so they saved l title as he spent down retirement money supplementing the much lower income they had as a waiter and substitute teacher

[marino760]

For me personally, renting would cost me much more than paying my mortgage, at least double. Just in the last 4 years, rents have skyrocketed while my mortgage payment has stayed the same.

Another question that could be asked is how do you manage retiring not having a reasonable mortgage but having to rent instead.