Retiring early March 1 of 2019 .Pay off house or continue house payments?

C

cattzee

New Member
Location
Iowa
Have googled this extensively online and most retirement advice say to pay off your house when you retire. Husband moved frequently with his job so we never got a home paid for.Approx payoff is 143,000. We owe 20 years on it yet.We could probably sell it for 235,000 or more depending on the market. We can afford to pay it off and we expect a tax hit but not too bad since he is only working the first 2 months of 2019. We plan to stay in it as long as we can.We are both in pretty good shape as well. We have made the major improvements the last couple of years as in new roof,remodeling inside,new flooring etc.All that is paid for. Sooo pay off house so its just a done deal? We are leaning to just paying it off.

Thanks for any tips.
 

I say go with the way you're leaning and pay it off if you can afford to. Debt free is the way to go IMO.
 

cattzee said:
Have googled this extensively online and most retirement advice say to pay off your house when you retire. Husband moved frequently with his job so we never got a home paid for.Approx payoff is 143,000. We owe 20 years on it yet.We could probably sell it for 235,000 or more depending on the market. We can afford to pay it off and we expect a tax hit but not too bad since he is only working the first 2 months of 2019. We plan to stay in it as long as we can.We are both in pretty good shape as well. We have made the major improvements the last couple of years as in new roof,remodeling inside,new flooring etc.All that is paid for. Sooo pay off house so its just a done deal? We are leaning to just paying it off.

Thanks for any tips.
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Depends on how much you would save on interest of the loan v. interest on savings/taxes on withdrawals. Just because most will recommend paying off the mortgage as important... minimizing the tax bite should be the key factor in making that decision, imo, even if it takes 5~10 years or even 20.
 
If the tax bite is because you now use mortgage payment interest why not hope mathjak weighs in with a more well informed opinion. Seriously he does know a lot about taxes. He might ask some question that are relevant to your particular situation.

Like most here owning with no mortgage payments works for us. Without knowing your tax concern, if where you live is the last place you want to own or move away from my opinion is based on knowing where we wanted to spend our retirement years.
 
There is one thing I noticed. You plan to stay in the house. So why not enjoy your retirement for awhile and see how it goes?

You don't want to be cash strapped and you have the equity in the house.

Then get some good advice from a tax professional on the best way to handle your retirement.

You really don't know how your retirement is going to go financial ways until you try it.

You may want to do some travelling or move to a different climate.
 
Hoot N Annie said:
do whatever lets you sleep well at night.
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I agree!

Talk to a professional that is familiar with your financial situation and then do what is best/comfortable for your personal situation.

For me that means always being debt free, a cash cushion and conservative investments. I'm always willing to sacrifice financial returns for bulletproof security.

Good luck!
 
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Knight said:
If the tax bite is because you now use mortgage payment interest why not hope mathjak weighs in with a more well informed opinion. Seriously he does know a lot about taxes. He might ask some question that are relevant to your particular situation.

Like most here owning with no mortgage payments works for us. Without knowing your tax concern, if where you live is the last place you want to own or move away from my opinion is based on knowing where we wanted to spend our retirement years.
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Each situation is different . It depends on a lot of things . It can suck to be house rich and cash poor in a situation that requires liquidity . I prefer to keep the mortgage going ,invest elsewhere and know I have all this extra money I did not bury in the house .

once money goes in you can not get it out ,you can only borrow more money and pay interest on top of borrowing it . So you can never access your own money without loans . Even a reverse mortgage is a loan .

there is usually a difference between what feels good and what makes more financial sense.

it is like we rent and I can buy a co-op for cash and save 6k a year in expenses compared to renting . But when I figure in we will give up 18k in income on the money now in the co-op our cash flow will take a 12k hit by buying. So it really would not be a better deal for us since cash flow is king in retirement . More equity I can’t spend does nothing for us.

I cant sell off the living room or spend it at the super market
 
Thanks for the replies. We will seek out advice for sure. One thing we wondered about is the money we use to pay the house off will no longer be making us money once we pull it... of course if we would of been smart we should of been paying it down over the years. Hindsight is always 20/20 .Ive read where some pay their homes off in chunks and spread it over a couple of years. I definitely appreciate the comments.
 
I run across that in some of my googling about being cash poor. I recall running into that when we were first married. We thought ohhh this place is wonderful with the higher payments and then found we couldnt even afford to even get out of the driveway.This gives us an opportunity to pause. I have friends who opted to pay interest only in their senior years but they have lived in the same place 25 years so their interest isnt much at all. I figured that and it was double what the principal is. Makes a difference how long you have paid on the home.
 
Starting in 2012, hubby and I started really paying down our mortgage. Double payments when we could, but always more than our normal house payment every month. We are down to around $9,000 now and will have it totally paid off next year. Due to circumstances, we can't pay as much now on our house payments as we were doing, but it doesn't matter as much now. I can't wait until it is finally paid off. I am tired of giving the banks all that interest. It makes me sick to think how much we have given banks over the years. For that reason alone, I would advise to pay off your mortgage as soon as possible. I will retire in a little less than three years and knowing I won't have a house payment hanging over my head makes the retirement all that more exciting.
 
i payed off my house, in may, and retired in feb, saved 6 to 8 months house payments, the taxes I encountered for early withdrawal (401) was a lot less than the money the bank would make off another 15 years of mortgage payments
 
you may have saved the interest but if that money in the 401k was properly invested it would have covered the interest plus likely gave you more money as well . that could be a very myopic view as well as an even worse deal with taxes and penalties . i am not saying it is wrong for YOU . but it is far from a fair comparison to the actual scenario just looking at the interest without the flip side of what is given up by sinking the money in to the house .

this is akin to the delaying ss discussions where people look at the increases without calculating the fact they will be spending down invested assets to delay , giving up checks , giving up spousal and giving up protection from medicare increases . as you see just looking at one aspect would not be a correct evaluation .
 
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So many choices.
We had the choice to invest or pay off our current mortgage. Since we don't have $$ enough to do both, we created a third option: to purchase a new property and build our retirement place there instead. It will be finished in spring, then we will sell our primary house and be totally out of debt. So far, this is working out to be the best compromise, and allows the majority of our retirement income to be discretionary.
 
The first financial advisors we spoke with gave us very bad financial advice. To be generous, they may not have been able to fully understand our then-current financial situation or our retirement goals. We passed on them and found a more helpful advisor. When you speak with financial advisors, be SURE that you fully understand and agree with their way of thinking.

We sold our three story house, which was far too large for us, and were able to use our equity to pay cash for a comfortable, smaller home offering one-floor living in our location of choice. That was the right decision for us. We have sufficient income and long term savings to see us through our remaining years.

What was a surprise was the cost of medical insurance. Medicare B costs around $135 per month for each of us and doesn't cover all that much, so we needed a gap policy. We essentially traded our old mortgage payment for total health insurance costs of around $1000 per month. Exasperating!

As noted above, the best plan for you depends on your own situation. Be sure you have a detailed budget for retirement that factors in ALL expenses and allows for reasonable contingencies.

Best of luck to you in your retirement.
 
Tommy said:
The first financial advisors we spoke with gave us very bad financial advice. To be generous, they may not have been able to fully understand our then-current financial situation or our retirement goals. We passed on them and found a more helpful advisor. When you speak with financial advisors, be SURE that you fully understand and agree with their way of thinking.

We sold our three story house, which was far too large for us, and were able to use our equity to pay cash for a comfortable, smaller home offering one-floor living in our location of choice. That was the right decision for us. We have sufficient income and long term savings to see us through our remaining years.

What was a surprise was the cost of medical insurance. Medicare B costs around $135 per month for each of us and doesn't cover all that much, so we needed a gap policy. We essentially traded our old mortgage payment for total health insurance costs of around $1000 per month. Exasperating!

As noted above, the best plan for you depends on your own situation. Be sure you have a detailed budget for retirement that factors in ALL expenses and allows for reasonable contingencies.

Best of luck to you in your retirement.
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i loooove medicare and say thank god we made it here . we were paying 7000 each for a silver plan with a 4500 deductible for each of us . medicare and our supplement is a fraction of what we paid . plus medicare premiums don't go up more than our ss increase .

that never was the case working when premiums sky rocketed whether you got a raise or not
 
cattzee said:
Have googled this extensively online and most retirement advice say to pay off your house when you retire. Husband moved frequently with his job so we never got a home paid for.Approx payoff is 143,000. We owe 20 years on it yet.We could probably sell it for 235,000 or more depending on the market. We can afford to pay it off and we expect a tax hit but not too bad since he is only working the first 2 months of 2019. We plan to stay in it as long as we can.We are both in pretty good shape as well. We have made the major improvements the last couple of years as in new roof,remodeling inside,new flooring etc.All that is paid for. Sooo pay off house so its just a done deal? We are leaning to just paying it off.

Thanks for any tips.
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Congratulations! :cool:
 
one problem with making extra payments to pay off the house and then channeling more money in to investing is time is your friend .

the longer your let larger amounts of money grow the less picking a good time frame matters .

many wait until the house is paid by channeling extra money in to the house rather than their investments and they inadvertently take away time as a friend . now you need to hope yours is not another lost decade . on the other hand the mortgage is fixed and unaffected by time . so it is usually not a good idea to channel extra dough into the house if you intend to beef up investments .
 

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