Resist the urge to pay off your mortgage before retirement | Federal News Network

Burning your mortgage, or, as Art Stein would say, telling the bank to go to hell, presents an attractive concept for those approaching retirement. You will get all the equity accrued from Center Entrance Colonial and its monthly mortgage nut will be gone.

But as sirens urge you to get out of debt, that may not be wise.

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Burning your mortgage, or, as Art Stein would say, telling the bank to go to hell, presents an attractive concept for those approaching retirement. You will get all the equity accrued from Center Entrance Colonial and its monthly mortgage nut will be gone.

But as Siren urges us to get out of debt, that may not be wise. fulfill. Why put hundreds of thousands of dollars in there?

A licensed financial planner in Bethesda, Maryland, Mr. Stein was a regular guest on the late Mike Cosey’s weekly show Your Turn. Art appears monthly on my show Federal Drive with Tom Temin. Listen to him on the third Wednesday of every month.his First impression was on October 19th and we discussed exactly this topic.

Stein acknowledged that the desire to be completely debt free is powerful. And what if you really don’t want to move? I personally have this very doubt. Sometimes I think cheap, sunny places are beckoning. But as a season ticket holder of both the Washington Nationals and the National Opera, how could I really love it without big league baseball and the arts, let alone thousands of furlongs away from my grandchildren?

On top of that, moving exacerbates the stress of retirement. No hurry. You can always move it later. Selling a home can be a big expense these days. The real estate agent asks that all furniture be hidden, that the house be stripped of evidence that someone has lived in it, and that everything be painted white. They call it staging. There are no pictures of velor ottomans or bar mitzvahs framed in imitation gold leaf.

Some people may get rid of the mortgage and have the cash to put it into the payoff, but leave it alone. Pointing out that they just take the money and void it. Essentially, you’re expanding the non-growth portion of the portfolio, the zero-interest portion.

A good financial planner will have a sophisticated planning program that integrates all of your spending patterns, income, TSP growth projections and required minimum withdrawal amount. They calculate the odds of maintaining your lifestyle. You may find that you can keep your mortgage, convert your earnings into productive investments, stay where you are, and make your payments.

“Home equity is equivalent to a savings account with 0% interest. No one says,” Stein said. “You don’t make money. If the rate of return is 0% for him, this is a lot of money.”

The same goes for making additional monthly payments to speed up your mortgage repayment. He doesn’t need to spend $300 on a mortgage when he can put $300 into an investment.

This is all especially compelling if you’ve refinanced in recent years to get a super low interest mortgage. You can now buy Treasury bills that pay you double what you’re paying back in interest on your mortgage. The obvious earnings calculation doesn’t even include the tax benefits of paying off the mortgage.

Maybe you’re just looking for a new place. Pretend to move, then remove as many things as possible. Even velor ottomans can make old places look new again.

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