I have been investigating different scenarios in FIRECalc in preparation for my FIRE.
I found some outcomes rather interesting. I kept all other variables constant, and altered only two- one variable was whether my mortgage was paid off as today (with the corresponding decrease in my net worth) and the other variable was whether a cost of living adjustment (COLA) was part of the state government pension that I will receive about 17 years from now. This COLA is presently the subject of a legal appeal, the outcome of which is uncertain.
The following shows the additional amount of net worth I would need to have in order to FIRE with a 95 percent likelihood of success:
Additional amount needed
$17,673
Mortgage paid off and with COLA attached to pension
$91,312
With mortgage paid off and no COLA attached to pension
$77,208
Carrying mortgage payments into early retirement and COLA attached to pension
$147,538
Carrying mortgage payments into early retirement and no COLA attached to pension
Now, I have no control over whether a COLA will be included in the pension (although of course I want it to attach), but I can control whether I pay my mortgage sooner rather than later. Are these numbers suggesting to me, that if my goal is to FIRE sooner rather than later, that it is in my interest to pay the mortgage now (I have a good interest rate, if that makes any difference)?
I found some outcomes rather interesting. I kept all other variables constant, and altered only two- one variable was whether my mortgage was paid off as today (with the corresponding decrease in my net worth) and the other variable was whether a cost of living adjustment (COLA) was part of the state government pension that I will receive about 17 years from now. This COLA is presently the subject of a legal appeal, the outcome of which is uncertain.
The following shows the additional amount of net worth I would need to have in order to FIRE with a 95 percent likelihood of success:
Additional amount needed
$17,673
Mortgage paid off and with COLA attached to pension
$91,312
With mortgage paid off and no COLA attached to pension
$77,208
Carrying mortgage payments into early retirement and COLA attached to pension
$147,538
Carrying mortgage payments into early retirement and no COLA attached to pension
Now, I have no control over whether a COLA will be included in the pension (although of course I want it to attach), but I can control whether I pay my mortgage sooner rather than later. Are these numbers suggesting to me, that if my goal is to FIRE sooner rather than later, that it is in my interest to pay the mortgage now (I have a good interest rate, if that makes any difference)?