We paid off the house when our first kid went to college. That was part of our financial plan to pay for college costs. We do not use our house like a bank. A friend retired and sold her home during COVID for $50,000 above the asking price and netted less than $20,000 because she had taken loans against her house over and over and over. Her decision, but not something I would do.
Having no mortgage payment means out expenses per month are that much less.
I know I know…there are some advantages to having a mortgage, but that wasn’t part of our retirement plan anyway.
I still owe on my mortgage, not a lot but refinanced in 2021 at 2.65% - a few CDs I recently got are 5.39% - I’m not going to pay off until what I get back is less than what I pay.
I don’t blame the FA at all. I blame my friend who isn’t being upfront about their entire picture. The FA can only work with what they’re given. As they say, the numbers you get out are only as reliable as the numbers you put in. That’s the G-rated version of that phrase.
I don’t find this controversial at all. I used to think it was the norm (it is in our house). Within 8 months of graduation each of my kids bought their own car (w cash), had their own car insurance policy, paid for the cellphone. (They did stay on our health insurance bc it was so cheap and they lived at home rent free for a year or two after graduation - working and saving.)
Financial planners say prioritize saving for retirement over supporting adult children, stop supporting adult children, etc. (There are exception of course, eg kids with special needs.)
Us too. My kids had their own credit cards (to start adulting, building credit, etc.), but we gave them one of our credit cards for emergencies since it had a higher limit than theirs.
That’s an equivalent of giving a car or a a good chunk of a house downpayment. The financial benefit for the kid is far greater than the cost to the parent.
I wish my youngest would move home so he could put that nice salary in the bank and save for a home one day but he has no desire to leave “in town” to come back to the suburbs. He’s comfortable, and has no idea where he will land in his industry - he’s not tied to this state. All of my kids are very different than their parents, although fiscally conservative in their own way.
My daughter stayed on my health insurance until she aged out, because mine was way better than what her company offered, and it was free for her to be on it. No brainer.
We had planned on not having a mortgage in retirement, but to get the house we wanted, it’s what we had to do. We can afford it, so no regrets.
In many states with an income tax, the SALT limitations and investment income surcharge means marginal tax rates for relatively high earners are well above 40%. If you aren’t getting a deduction for mortgage interest then paying the mortgage off might still be financially advantageous at these rates.
OTOH if tax rates revert to pre-2017 levels after next year then the mortgage interest deduction might suddenly become valuable again.
We paid off our mortgage before retirement. Could argue either way as the interest rate was low, but it is nice to have no debt. We’ve always paid cash for cars, etc. and paid off credit cards each month. We are retired now.
I wouldn’t necessarily say we’re financially conservative, as we still have a big chunk of savings in the stock market – but we also have reserves set aside for some home improvements and travel while we’re young enough to see the world.
Haven’t touched any retirement savings (most in Roths as we took advantage of the year there was no limit to convert). Don’t need to take a RMD yet from H’s IRAs. Mine is all Roth.
Agreed. Years ago we had free Merrill Lynch consultation (work perk). The financial planner said that good argument could be made to NOT pay off the mortgage, even in those higher interest times. Nonetheless his highest income clients had all paid off their mortgage because they liked the peace of mind. No right or wrong answer (if not using the equity as a credit card)…. but it is good if there is a scheme that both spouses like.
We paid our mortgage down 500K a couple of years ago. Big mistake because the rate is only at 2.25%, and as it ended up, we would have had better uses for that money. Oh well. We still look forward to when our mortgage will be paid off in Aug 2025. But we’re definitely not going to pay anything off early, even if we get a windfall. We did not plan for rates to rise so dramatically.
Oh my - that’s a big gulp. Our method was more gradual. We initially took a 30 year mortgage, then 7 years later refinanced to a 20 year. We considered paying it down faster but then had some lean years. Toward the end we were paying mostly principal so it seemed less appealing. But then we decided to pay the last 2 years, get it to zero before retirement.
I did forget to say that when we refinanced, it was for a 15 year term. We’ve mostly had 15 year mortgage loans. The others were for past homes.
So the house will be paid off shortly after we draw social security. We just retired before. It’s been a good choice so far. We are very lucky to be able to do this.
We secured a 30-year mortgage on our first home, which we lived in for ten years. Then, a 20-year on our second home which we lived in for 16 years. During that time, we refinanced to a 15-year and paid it off early to coincide with our son’s HS graduation and our move to our current home which is mortgage-free (as is our cabin in ME). Like some others above, we were driven by SWAN rather than interest rates. It was always our plan to retire with zero debt (including cars). Our FP was clear that it didn’t matter either way, but accelerating principal payments shortens the term and reduces interest payments which was appealing. In any case, if you have a low-interest mortgage, and your money can earn a higher return elsewhere, keeping the loan can make sense, too. Whether or not to discharge your mortgage or any other debt is a personal decision based on how you feel about carrying those commitments, no right or wrong IMO.
We did 15 years mortgages. At one point we refinanced down to a 12 year. House we bought in 1988 was paid off in the early 2000’s. Felt great to be free and clear and we were in our 40s!
We haven’t paid off the mortgage (have a 3% rate) but when we retired I put enough money to pay it off into a high-interest savings account (currently 5.1%). I call it my “sleep well at night” account. With taxes I’m not sure that I’m really coming out ahead much, (we have to take the standard deduction anyway) but I do like knowing I have the money to pay it off and having it be more liquid in case of emergency.
We took a 30 yr originally, refinanced twice on 15 year loans at lower rates, and pulled a modest amount of equity the second time to cover the portion of S2’s last three semesters that my lost income would have paid. Got down to two years left on the mortgage and decided to just pay it off and throw the monthly mortgage amount into savings. Even though the interest rate was 2.875, we figured we’d get a better return investing. That timing worked out well for us, and mortgage was done in under 25 years. If we hadn’t had to pull the equity, it would have been paid off in 20 years.
I lump your situation paying for private insurance coverage as “not bothering”. You can choose not to sign up for the free Medicare A, and ignore the rest.
“I think your assessment is a bit insulting…” Why are you insulted?
IDK what the statistics are for those who qualify for Medicare and do not sign up for it, paying for private insurance coverage or deciding they don’t need Medicare. But I would wager maybe 80% of people at least sign up for the Medicare A if they qualify.
