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INO it is not important to be debt free. In fact after retiring, I bought a new home with a 30 yr mortgage and I also bought a car with a 5 yr loan. IMO owning a home is not important. In fact when I retired I sold my house but still had a mortgage.
The important criterion is having enough income and investments to fund your anticipated expenses and lifestyle. Like many, SS covers a nice chunk of my expenses and the 4% rule covers the remainder. In addition I keep a cushion of over a year in cash so that I can avoid pulling from investments when the returns are poor or the market drops like it has recently.
This is our experience too. We chose not to pay off our mortgage, but did direct as much as we could into retirement accounts which, over time earn more money. I hate to say this, but our home which we lived in for 26 years was a terrible investment. Knowing this now keeps us from doing any major expensive improvements on the house we live in now. And the declining stock market makes loath to spend as well.
Unless you own an expensive home in a high cost area and sell it and relocate to cheapsville, a home is usually a far better cost cutter then an investment.
Unless you own an expensive home in a high cost area and sell it and relocate to cheapsville, a home is usually a far better cost cutter then an investment.
This is our experience too. We chose not to pay off our mortgage, but did direct as much as we could into retirement accounts which, over time earn more money. I hate to say this, but our home which we lived in for 26 years was a terrible investment. Knowing this now keeps us from doing any major expensive improvements on the house we live in now. And the declining stock market makes loath to spend as well.
Why do you say your home was a terrible investment? Unless a neighborhood goes bad or a person bought high house prices went down, houses usually appreciate in value. Especially after 26 years.
As for owning a paid off home, the biggest advantage is no rent due. Zero rent is a nice number.
Of course, it needs to be maintained and the property tax and insurance bills need to be paid.
But the piece of mind knowing that it's difficult for somebody else to threaten your housing is worth the expense.
I live in a 5 house subdivision with no covenants and like the idea that I can park my vehicles anywhere on my property without someone complaining. Rules and restrictions do keep junkers out but can be overbearing at times. Hence we moved out of town to the country.
Could you retire earlier and just purchase your own insurance through Obama Care?
I actually was "retired" earlier but went back to work at 61 primarily because our combined health insurance premiums had risen to $2K per month with a $5K deductible each.
Unless you own an expensive home in a high cost area and sell it and relocate to cheapsville, a home is usually a far better cost cutter then an investment.
I repeat the statement of JasperHobbs above. This is an extremely ambiguous sentence.
In my case, I concluded at age 50 that I needed a paid-for low cost of ownership home that didn't consume a huge fraction of my net worth in order to retire. Ignoring the evil cable company, my property taxes, insurance, utilities, and a bit of maintenance total about $5K. I at least know I'll always have a roof over my head even if I spend myself out of money. Assuming I hit my financial targets 7 years & 10 months from now, my home will be about 20% of my net worth.
But in retirement if you are living in it the worth of it isn't a factor as long as you are consuming it.
All that counts is what are your housing costs relative to cash flow. You can only sell it or take a loan against it to have the equity matter.
Having a paid off house usually means if you had it long enough the house has to double or triple just to cover the interest. By the time we add in taxes. Repairs and renovations the total cost of housing you over decards of retirement and prior is more then most houses will ever be worth.
So it boils down to cost cutting , namely you hope all the expenses of housing you cost less then renting
Last edited by mathjak107; 02-13-2016 at 12:32 PM..
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