Pay Off Mortgage?

[Commercial Inside Release]

Domiciles have protections in a lot of financial disaster scenarios. Worth losing 1.5% you could've earned on a CD, to own it free and clear. Lots can happen... Lawsuits, divorces, accidents, health surprises.

Of course, when (not if,) interest rates rise some more, I would reconsider... But, I'm biased. I watched a bunch of adults with deep pockets make piles of money in the early 80s, when CDs paid 14-16.5%.

 

[DriverNerd]

You have the ability to take whatever the mortgage payment was and put it toward something far more rewarding than a CD while eliminating all risk that comes with carrying a mortgage. The allure if you're getting a net return of 7% or more is understandable, but man, 2%? For me that'd be like driving out of my way to save a few cents on gas.

That's true but I was assuming he was getting the money from his retirement accounts. If he's taking money out of retirement then just using the money he would have spent on the mortgage for other investments just wouldn't make sense. He could just put some of his retirement in riskier investments.

What risk would you consider a mortgage to have?

 

[IVE GOTTA PACKAGE 4U]

That's true but I was assuming he was getting the money from his retirement accounts. If he's taking money out of retirement then just using the money he would have spent on the mortgage for other investments just wouldn't make sense. He could just put some of his retirement in riskier investments.

What risk would you consider a mortgage to have?

What happens if you put his retirement money in riskier investments in the went down 20 or 30%?

 

[Nolimitz]

The dude is 70 years old. how much risk should he take?

 

[DriverNerd]

What happens if you put his retirement money in riskier investments in the went down 20 or 30%?

I personally don't think he should at all. He should have all his money in stable value funds of some kind at his age, I was just replying about trying to find an investment that gives more interest if that was someone's goal. At 70 safe and stable is the way to go for sure.

 

[IVE GOTTA PACKAGE 4U]

I personally don't think he should at all. He should have all his money in stable value funds of some kind at his age, I was just replying about trying to find an investment that gives more interest if that was someone's goal. At 70 safe and stable is the way to go for sure.

But he also has to think about his RMDs
And future taxes
After 2025 the tax rate is going to go up


But I did enjoy reading this thread because lots of good answers and lots of different opinions


Quick edit

Don't forget about secure act 2.0 if you're going to leave money to your children

 

[MassWineGuy]

She’ll be 70 in August. We’ll collect about $5,000/month in Social Security. At least whenever I file for it.

 

[Fred's Myth]

She’ll be 70 in August. We’ll collect about $5,000/month in Social Security. At least whenever I file for it.

Hope you both signed up for Medicare at 65, otherwise you'll be paying penalty premiums, IF you can get coverage.

 

[59 Dano]

What risk would you consider a mortgage to have?

All debt equals risk. All it takes is a job loss, medical issue, economy taking a turn for the worse, etc. to put someone behind the 8 ball. Even worse if you've got student loans or car notes to pay off, or if your equity:debt ratio on the house is lousy,

I know some people who talk about having a mortgage, a car loan, a boat payment, a 70k truck w/payments to pull the boat, student loans, and they talk like that kind of thing is normal and no big deal. All I can say is wow, they must like making payments to the bank!

 

[DriverNerd]

All debt equals risk. All it takes is a job loss, medical issue, economy taking a turn for the worse, etc. to put someone behind the 8 ball. Even worse if you've got student loans or car notes to pay off, or if your equity:debt ratio on the house is lousy,

I know some people who talk about having a mortgage, a car loan, a boat payment, a 70k truck w/payments to pull the boat, student loans, and they talk like that kind of thing is normal and no big deal. All I can say is wow, they must like making payments to the bank!

I don't think there's much risk for the OP, but I can't argue that some people take on extreme debt loads. I think we all know a few people that have new everything and we know they can't afford it.

 

[MassWineGuy]

Hope you both signed up for Medicare at 65, otherwise you'll be paying penalty premiums, IF you can get coverage.

Yes, we both signed up then. She’s using Medicare. I’m using the company’s less than good plan.

 

[Empty Pockets]

Should we pay off our mortgage before retiring? My wife is retiring fully by August. I’ll keep working another couple of years or so, depending on how awful Express gets.

Payoff balance: $116,700
Monthly payment: $1,635 (increases periodically)

Current retirement funds: approx. $1-million, not including Social Security.

Look at it from another perspective... If your home was paid off, would you mortgage it and invest that 116 K for all those extra benefits?

 

[yadadamean116]

Pay it off. Peace of mind is worth more than interest rate vs investing tinkering

 

[It will be fine]

Look at it from another perspective... If your home was paid off, would you mortgage it and invest that 116 K for all those extra benefits?

If anyone could get a sub 3% mortgage right now they absolutely should do that. This is a math question, leave your feelings out of it.

 

[Empty Pockets]

If anyone could get a sub 3% mortgage right now they absolutely should do that. This is a math question, leave your feelings out of it.

My feelings had nothing to do with it. I was quoting Dave Ramsey which I totally agree with.

 

[It will be fine]

My feelings had nothing to do with it. I was quoting Dave Ramsey which I totally agree with.

Dave Ramsey gives advice for people that are incapable of managing money. He treats debt like a member of AA treats alcohol. It’s not good advice for fiscally responsible people.

 

[59 Dano]

Dave Ramsey gives advice for people that are incapable of managing money. He treats debt like a member of AA treats alcohol. It’s not good advice for fiscally responsible people.

A fiscally responsible person with no debt is a victim of bad advice?

 

[Gone fishin]

Pay your house off before retirement , that’s the best advice

 

[!Retired!]

A fiscally responsible person with no debt is a victim of bad advice?

In some, but not all cases, it is.

 

[It will be fine]

A fiscally responsible person with no debt is a victim of bad advice?

If they are sacrificing potential gains just for the feels of being debt free, yes. Taking cash to pay off a 3% debt right now is bad advice, they could gain more with virtually no risk when basic saving accounts are paying 4%.