Should I Pay Off My Mortgage? The Math & Beyond...
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- Опубліковано 8 бер 2024
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🏠💭 Are you approaching retirement and wrestling with the big question - should you pay off your mortgage? You're not alone! In this video, we'll help put numbers to this question.
🔍 In this video, we'll explore:
The Pros and Cons of Paying Off Your Mortgage in Retirement
Tips for Making the Best Decision for Your Situation
How to Calculate the Decision
Why This Decision Goes Beyond a Spreadsheet
📊 Whether you're close to retirement or planning ahead, understanding the implications of this decision is vital. We'll break down complex financial concepts into easy-to-understand information, helping you make an informed choice about your mortgage and retirement.
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ABOUT ME
I’ve always been passionate about personal finance, investing, real estate, and helping people find the freedom to live their life with purpose. But when my dad died in 2015, I tried to help my Mom find an advisor to sort out her finances. Instead of a helping hand, I found an industry of financial advisors dominated by glorified salespeople working on commission - pushing products that were not in my mother’s best interest. Or advisors with minimums that shut-out all but the ultra wealthy. Disappointed with the options, I took matters into my own hands and launched Foundry Financial, a wealth management firm with transparent pricing that specializes in helping provide clarity around money - so you have the confidence to make smart decisions.My goal is to help a million people retire without worry!
📅 THE BASICS OF RETIREMENT PLANNING
Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our goal is to help people master retirement and retire without worry.
Step 1: Know when to start retirement planning. When should you start retirement planning? The earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning. Even if you haven’t so much as considered retirement, don’t feel like your ship has sailed. Every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.
Step 2: Figure out how much money you need to retire, The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses will change in retirement.
Step 3: Prioritize your financial goals. Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.Generally, you should aim to save for retirement at the same time you're building your emergency fund - especially if you have an employer retirement plan that matches any portion of your contributions.
Step 4: Choose the best retirement plan for youA cornerstone of retirement planning is determining not only how much to save, but also asset allocation. It can make a massive difference in your retirement plan.
Step 5: Select your retirement investments. Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of investments depends on how long you have until you need the money and how comfortable you are with risk. It’s often helpful to talk with an adviser to discover the right mix of stocks and bonds.
❣ SPONSORED No, this video was not sponsored.
⚠️ "DISCLAIMER:⚠️This is not financial or investment advice. This Channel is meant for EDUCATIONAL AND ENTERTAINMENT PURPOSE only. None of this is meant to be construed as investment advice, it's for entertainment purposes only. #retirementplanning #retirement #passiveincome
Will you pay your mortgage off or invest?
I think inflationary times are around for awhile. Locked in during lower rates. So yeah I’d love to have no stress but the math gives the answer
I hedged my bets. I pay $200 more on my mortgage every month and the extra $300 I had available goes in a high yield savings account at 5.25%.
We paid off our 5.25% mortgage 19 years ago when I retired. It gave us a level of comfort during the GFC. Glad we paid it off, but if we had a 3% loan today, I don't think I would pay it off.
Cashflow incoming uncertainty means mortgage free home ownership is perfect.
Particularly if you live where you want to live.
I love how you present the information. We are still working. If we paid off our mortgage we could just invest the money from our pay. We are in this situation right now. Decisions decisions.
Thanks! Good luck on your decision.
My mortgage interest rate is 2.875%. Not paying it off unless T Bill rate fall below 3% 😂
We bought our home in 1995 on a 30 year at 8% interest we paid it off in 2009, when we bought the house our goal was to pay it off in 15 years or less smartest thing we ever did paying off the house, since 2009 we have been debt free, we use cash for 99% of our purchases, with extra money we buy precious metals
Congrats on paying it off!
Kevin What state are you located in? Love the way you present the information clear and precise. Reading your about you mention some of the same feelings I have about financial advisors.
California. Although my clients are across the country.
I am paying my house off. I want that “security” of not having that big mortgage payment monthly. 😇
I’m 59 and targeting retirement at 67. I decided to keep my mortgage which has a really low interest rate and I’m only 3 years into a 30 year loan but I am putting $500 a month extra towards the principal.
I’ll give up a little in return to pay off my mortgage. There’s not really any mortgage interest deduction anymore.
It’s also nice to reduce monthly expenses.
Great job explaining the pros and cons!
Thanks!
Great video and content! Going through the same scenario with a 3% mortgage. The factor I am thinking about is lowering my monthly expenses at retirement with a paid off mortgage so that I can stay in the 12% tax bracket for any taxable capital gain withdrawals from a brokerage account. Also keeping my tax bracket lower for Roth conversions. Any thoughts on this or how to factor this in? Thank you!
If you can afford it I say yes, you can’t eat your house and it’s a great relieve and a big risk that’s gone. I’ve been mortgage free for a decade and saving incredibly. People only look at the numbers but not factoring risk. How much is the risk?
Are you saying parking the money in government treasuries has risk? Or a bank CD?
@@foundryfinancial the risk is loosing your house because you have a mortgage. And while people are making one percent or 2 percent because of these great mortgages compared to CD, I’m making 12 percent in an index fund for a decade and making my old mortgage payment into my brokerage account. And if these folks are leaving their money in the market and thinking they have liquid funds they are fooling themselves in a down market.
@kckuc310 but you can get 5.3% in risk free short-term government - no market risk. Still risky?
@@foundryfinancial lol did you read anything above ? So for the few who maybe investing securely and making 3 percent and only 3 percent I’m making over 12 percent being paid off for a decade and the risk factor is gone for a foreclosure. What’s the risk worth? I believe most people are in the market and during a downturn won’t want to withdraw to pay off their mortgages and if they do they will lose their 3 percent. Nobody puts a risk in their excel sheets about having a mortgage
@kckuc310 but you took 200k out of the market of savings to pay off the loan. You’re DCA’ing. At 1500 a month it’ll take a while to get back and you’ll have less cash reserves in the meantime. But it’s an interesting perspective.
For most people in or near retirement it is better to pay it off, unless they are wealthy.
There is no risk to paying it off and it improves cash flow. Going after a 2-3% spread on a mortgage is silly for most. If the market does well, you will be fine anyway, but if it does poorly, so will your portfolio.
Paying off the mortgage is just super!❤
It does feel good. But I have a 2.69% - if you priced it like a bond, I’d lose a lot of value if I paid it off.
Market is at ATH. This will not end well if you invest more. I’m maxing 401 k and Roth IRA. Rest is paying off mortgage.
Two things.
First, you could easily invest in risk free assets that return more than the average mortgage. I’m not against paying off the house, but this isn’t the argument.
Second, since the 1950s, the index has posted over 1,200 new highs, averaging more than 17 new highs per year. During that time the market has annualized an average return of over 11% per year. Not saying we won’t see a downturn, but a bit of perspective is helpful.
I see the numbers and understand the logic. However, the peace of mind and psychological value of owning our home outright is priceless. I have no debt other than mortgage. We have $100k in cash high yield savings with $60k of that designated as emergency. I'm maxing out my 401k and IRA. I'm fortunate enough to have my military retirement as well. We bought it in 2017 for $350kwith a VA loan and now have just $60k remaining. My goal is to payoff by end of 2025. I don't want to be enslaved by bills to keep a job if I don't want to. When your home is paid off, I can imagine decisions become easier to make and one can definitely supercharge investments and other savings. To me the key is debt- I saw my parents splurge and go into bankruptcy. Both my wife and I agreed we wld never allow ourselves to have those issues.
That’s why every decision cannot be made on in a spreadsheet! Sounds like you’re doing incredibly well. Keep it up!
Depends on interest rate and real estate can be impaired. First get a BTC allocation then do what gives u peace of mind
Haha. :)
Question: should I pay off my mortgage by withdrawing from my IRA, which would push me into a higher tax bracket? (I am fully retired, age 69)
I probably wouldn’t…but it’s always case dependent.
We've got a 20 year term loan, 2.875%. $185k balance. I figure we're by default "paying it off early" compared to a 30 year, so not putting any additional towards it. Should be paid off by the time our first child is entering college. In the meantime, we're mainly putting money into tax advantaged accounts. I like that our 401ks combined are over double our mortgage balance. Shows the difference of returns well I think. Wonder what percentage of the population has more in retirement accounts than their mortgage balance.
We have a significantly higher amount in retirement savings than what we owe on 3 mortgages. But, we want to pay off all three mortgages before we retire. We are about 3 years away from that goal at age 59 & 60.
Pay off the note. Best decision of your life. This will make you home insurance free.
Everyone is different, but I definitely sleep better at night with no mortgage.
Yeah, I can imagine it’s a great feeling.
Pay off the house. Use the equity to take a loan and buy Bitcoin. Retire in 4-8 years.
Pay it off.
What’s your case for paying it off?