Should You Pay Off Your Mortgage Before You Retire? (Florida, medicare, place)
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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.
Totally agree. It's not "pennies", far from it. The two "piles" I could pay off my home from (a brokerage account, and a mortgage-free vacation rental) have gained in current value at least $360K in the last 3 years, as well as throwing off an additional $30-40K annually in net income. We sleep very well. We don't actually have any "creditors" except our mortgage lender. We have plenty of insurance for medical costs, and/or liability suits. I guess everyone deals with "risks" in their own way. The reward in my case outweighs perceived risks, especially those that are extremely unlikely. The more likely risks are covered by insurance.
Not true. I can't take your house from your spouse. They will take it from your children
It depends on where you live.
In FL an enhanced life estate deed, lady bird trust or a transfer on death deed, ownership passes immediately to the named beneficiary. There is no violation of the Medicaid look back rule because the beneficiary does not have ownership prior to death, unlike a trust.
Several states beside FL allow this type of estate planning tool.
One more thing to note. Some folks mortgages are $400 a month. Others are $2000 a month. That makes a difference.
Based on their income and assets, to some folks a $2000 mortgage is nothing at all. To others, a $400 mortgage is a mountain to climb. It is all relative.
Based on their income and assets, to some folks a $2000 mortgage is nothing at all. To others, a $400 mortgage is a mountain to climb. It is all relative.
For the $400 mountain, paying it off means everything. For the $2000 molehill, paying it off means nothing. That is exactly why this thread will never go away; the two different camps seem incapable of yielding their position on the matter because of personal preferences.
I just love breaking out the popcorn and kicking back for the fireworks!
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?
Well, stop being logical.
Since he was a high earner for some time before retiring, he gets close to the maximum payment. I think it hurts him a little to have to turn around and pay the mortgage with it. So sell the house that was costing us way too much to maintain, pay off the mortgage so he never has to think about that again, put the remainder of the cash from the sale in an index fund or some such and live happily ever after.
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?
It's choosing lower risk over higher reward when one is in a position that you have all the money and wealth you think you'll need until you pass. In our case, barring some seriously calamitous event, we won't need most of our wealth and are just managing the transition of that wealth to our kids when we die.
It's choosing lower risk over higher reward when one is in a position that you have all the money and wealth you think you'll need until you pass. In our case, barring some seriously calamitous event, we won't need most of our wealth and are just managing the transition of that wealth to our kids when we die.
TT, thanks. I guess I am so far from that I just cannot imagine having more money than I could easily spend. In fact it is sort of fun to think about what I would change if I had more money.
If I just had a few extra million, I would rebuild the backyard to include a covered hot tub and a large heated solarium. A covered swimming pool would be kinda nice also. I would upgrade the cars and plan a long around the world trip when Covid abates a bit more.
With quite a few tens of millions more, no doubt I would like an estate in the Hamptons and a high rise condo overlooking Central Park. I am not greedy or austentatious. Five million or so each should do it. Of course I would also want the advantages of patron level memberships for the major museums and season passes for the symphony and other major presentations. I would also enjoy eating in some of the finer restaurants in the city.
And on and on.
Yup, it sure would be nice to have all the money I would need to live out my remaining years with some indulgences and no financial concerns.
As in all financial matters, there's not only one right choice. There's a range of options, and then those options get evaluated by people who have different emotions, biases, baggage.
Some can't do change of any sort, even if it would benefit them. Some are unwilling to keep any debt, even the kind that could be used to leverage to higher wealth. When in doubt, people tend to do what keeps anxiety lower and feels safer.
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.
This is an understandable sentiment but a flawed one. I recalled back in the 70s despite the "sky high prices" of homes Mom insisted we buy while Dad as a bread winner was perfectly content that we live in a 2 bedroom apartment. It was "less risky" for him & reduce his stress of providing roof over our heads. He was in commission-based import/ export sales. Well, 10 years later the home appreciated significantly having rose through the inflation.
If you can afford it, a $1M home will have a much higher appreciation than a $100K home. If you think you can't afford it today, just imagine how much you can't afford it 5 - 10 years from now.
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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.
Agreed with your last sentence whether you're a city-dweller or a non city-dweller. Here in SoCal, today's decent homes will start about $1 - $1.5M. You can't make a good profit buying it as a rental, but many choose to buy it as their primary residence to build wealth in their lives.
I think what you're trying to say is, if you have limited finances that drives your decision on whether to rent vs buy between a high cost area like NYC vs more affordable suburbs. But if you can afford it, buying proves to be a right decision on the long run.
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