Should You Pay Off Your Mortgage Before You Retire? (benefit, restaurant, kids)
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I am not at all concerned about asset protection from creditors and if this is a concern, it might be a good idea to find solutions. We have an "umbrella" policy which is a low cost and high coverage policy providing substantial protections beyond the typical home and auto insurance.
In addition to Medicare we pay for supplemental medical and LTC coverage. We have budgeted and set aside money for additional choices such as a CCRC buy in.
Sure your house may be protected from creditors BUT that is a poor solution especially if they get everything else and you are down to a house you cannot afford to live in.
Since your remaining mortgage before paying it off was small, it hardly made a difference either way.
Sure the housing market is strong and prices are way up. It still takes many months to sell a house at least in this area. Even after a firm offer from a qualified buyer, it is rare to see a house close in under 4 months. After her husband died, my sister had a dire need to sell her house. It took her over a year. She had to downsize, clean/paint, etc and during that process she had some major medical issues. She was down to borrowing from her kids and I also made a contribution so she could get by.
Where I live if for some reason you have to go to a nursing home they can't come back against your house. They can your money. Yes there are ways to address that before that point. But in theory, if you have to go to a nursing home while you may us up all your money you will still have the assets in your house to leave your kids.
Our goal was to retire with zero debt, period. I don't have the time or ambition to chase pennies I might have earned investing the money we used to pay off the house. It wouldn't have been life-changing money even under the best scenario, so instead I'll sleep better at night knowing I don't owe anyone a mortgage payment tomorrow.
For me it has not been chasing pennies. I am ahead by $200K on a $330K mortgage in less than 10 years. The $330K plus the gains of $200K put me at $530K extra in my portfolio. It will not be too long before that turns into over $1 million beyond what would have happened if I did not take a mortgage. That is not pennies.
Believe me I sleep better knowing I will have another mil to spend for old age care or to pass on as inheritance.
BTW, I also enjoy the convenience of having a mortgage. The mortgage company handles all the payments for property taxes and insurance. I don't even want to see the tax bill. It is way over $10K and continues to increase.
Where I live if for some reason you have to go to a nursing home they can't come back against your house. They can your money. Yes there are ways to address that before that point. But in theory, if you have to go to a nursing home while you may us up all your money you will still have the assets in your house to leave your kids.
LTC insurance exists for this reason. In addition I have money set aside for assisted and/or nursing care in my old age. The extra million or so dollars I will pocket due to my mortgage is also a help.
I am also not really concerned about leaving my kids a bunch of money. We have helped them throughout their lives including help when they were adults. If leaving kids an inheritance is an issue there are better was to do that. You might also want to consider what happens to that house that sits vacant while you are living out your remaining months or years in a long term medical care facility.
For me it has not been chasing pennies. I am ahead by $200K on a $330K mortgage in less than 10 years. The $330K plus the gains of $200K put me at $530K extra in my portfolio. It will not be too long before that turns into over $1 million beyond what would have happened if I did not take a mortgage. That is not pennies.
Believe me I sleep better knowing I will have another mil to spend for old age care or to pass on as inheritance.
BTW, I also enjoy the convenience of having a mortgage. The mortgage company handles all the payments for property taxes and insurance. I don't even want to see the tax bill. It is way over $10K and continues to increase.
by renting and deploying the money we used to have in a house elsewhere it grew to multiple 7 figures in about 15 years....
so a home is fine for those who are not investors , but one should never think they are not likely behind by having to much money in a house over the long term. cutting expenses is not the same as growing income
If your rate is low, it’s better to keep it. So many think paying off a mortgage reduces risk, but it actually increases it. You take liquid funds and put them into an illiquid asset. So you remove flexibility plus any liquid income that may come from those funds.
Yeah, I don't think my spouse is going to buy that. The mortgage eats his entire monthly SS payment plus a bit more. We already have several mil invested that we won't have to touch after we sell the other house and pay off the AZ mortgage. What's left over from the sale should easily fund about 20 years of living expenses.
Yeah, I don't think my spouse is going to buy that. The mortgage eats his entire monthly SS payment plus a bit more. We already have several mil invested that we won't have to touch after we sell the other house and pay off the AZ mortgage. What's left over from the sale should easily fund about 20 years of living expenses.
One size does not fit all.
This sort of logic just makes my head hurt. I know I am limited. I cannot imagine having so much money that having more would make no difference.
For someone with that amount of wealth, why would the paltry amount coming from SS make any difference?
I am not at all concerned about asset protection from creditors and if this is a concern, it might be a good idea to find solutions. We have an "umbrella" policy which is a low cost and high coverage policy providing substantial protections beyond the typical home and auto insurance.
In addition to Medicare we pay for supplemental medical and LTC coverage. We have budgeted and set aside money for additional choices such as a CCRC buy in.
Sure your house may be protected from creditors BUT that is a poor solution especially if they get everything else and you are down to a house you cannot afford to live in.
Since your remaining mortgage before paying it off was small, it hardly made a difference either way.
Sure the housing market is strong and prices are way up. It still takes many months to sell a house at least in this area. Even after a firm offer from a qualified buyer, it is rare to see a house close in under 4 months. After her husband died, my sister had a dire need to sell her house. It took her over a year. She had to downsize, clean/paint, etc and during that process she had some major medical issues. She was down to borrowing from her kids and I also made a contribution so she could get by.
I'm not disagreeing with the majority of your post, but here homes sell in days if not hours, and many are cash buyers who want short escrows. I've had 3 escrows on homes I've bought or sold settle in 3 weeks from offer acceptance to closing. I guess every area is different though.
We also protect ourselves with an umbrella policy. My issue with what Beach43ofus posts is regarding the liquidity of just selling their house if they needs the tied up money. Unless he/she is moving to a lower COL place, or significantly downsizing, he/she would have to pay the same inflated prices for a new place, or rent. There's nothing wrong with renting, but saying you can just sell is not the same liquidity as other investments, it means packing up and uprooting your entire life, versus calling your broker and saying "sell".
Think how much hassle it is selling your home, finding a new home, moving, changing your address, and all your utility accounts, notifying everyone, possibly finding new providers for all your regular services, etc. That's hardly liquid.
And just getting a HELOC is not the answer, a lot of your credit score is dependent upon having active current credit accounts, and a verifiable continuous source of income in the proper ratio to what you are trying to borrow, even in a secured account like a HELOC.
Where I live if for some reason you have to go to a nursing home they can't come back against your house. They can your money. Yes there are ways to address that before that point. But in theory, if you have to go to a nursing home while you may us up all your money you will still have the assets in your house to leave your kids.
Not true. I can't take your house from your spouse. They will take it from your children
by renting and deploying the money we used to have in a house elsewhere it grew to multiple 7 figures in about 15 years....
so a home is fine for those who are not investors , but one should never think they are not likely behind by having to much money in a house over the long term. cutting expenses is not the same as growing income
If I lived in NYC as you do, I would not even consider buying. A SFH would be out of the question and I would not want to live in the equivalent of an apartment and still have to deal with high HOA fees and all the associated issues.
Living in a SFH in the burbs is entirely different as you well know. If I had rented in 2013 instead of buying, rent would have been just a bit more than my mortgage and escrow payments. Now I would be paying twice as much in rent. On top of that my house is now worth at least 50% more than I paid. Those hundreds of thousands of dollars would be in the pocket of the landlord. For the vast majority of us non-city dwellers, owning a home is one of the biggest steps we can take in generating some wealth.
One more thing to note. Some folks mortgages are $400 a month. Others are $2000 a month. That makes a difference.
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