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Mortgage in retirement.
Old 08-28-2006, 04:21 PM   #1
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Mortgage in retirement.

So, how am I doing $830,000 in retirement savings. $530,000 401k 7 IRA’s $300,000 in savings. I have a house for sale and am sure I will clear close to $100,000 or at least $90,000. I just moved into a house valued at about $275,000 and am caring a mortgage of 195,000 at 6.25%. When the house sells, I am going to put $50,000 into savings and $50, on the mortgage or $45,000 on each depending on the sale price of the old house. Oh yes the old house is free and clear. So I should wind up with a mortgagee of about $144,000 and savings of close to $880,000. I am 57 plus retired and will collect SS at 62. I am married but feel even if I was not I would be ok. I was told I could pull roughly $42,000 and with my living style, house note and health insurance I should be ok. Thoughts?
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Re: Mortgage in retirement.
Old 08-28-2006, 06:15 PM   #2
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Re: Mortgage in retirement.

Congrats on your nice nest egg, runnerr! I personally don't like to have a mortgage (except for maybe a small one) in retirement, but I'm a bit of a Nervous Nellie . Before I can answer your question, I need a little more info--

Are you certain about your monthly expenses--have you tracked them in detail for at least a few months? Does your budget account for taxes (fed, state, property), health insurance, replacement cars, home maintence/repair, occasional expenses like entertainment and gifts, and so on? Have you run your numbers through FIRECalc?

Is your mortgage rate fixed? Are you planning to refinance with the $45-50K or do you have a HEL to pay (pun semi-intentional )?

Do you have guaranteed employer-provided/assisted health insurance?

Are there any pensions in your future?

It looks like you're planning to withdraw 4.7% of your portfolio per year (more than most of us, I think, but within the realm of safety). Are you planning to reduce your withdrawal when you start collecting Social Security?

And finally, are you familiar with different methods of withdrawal from a portfolio, such as increasing based on inflation and downside protection (reducing the withdrawal after a bad year in the market)?

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Re: Mortgage in retirement.
Old 08-30-2006, 08:41 AM   #3
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Re: Mortgage in retirement.

Astrmeria,

sorry about the delay, yes I am sure about the monthly expenses and the numbers have been run on Fire-Calc. I actually overstated the expenses just to be on the safe side.

I have access to the VA for medical just in case I should lose the employer health care. I would then take out a catastrophic policy with a high deductible just in case of an emergency where getting to the VA facility was not possible.

As for the 50K going on the house, the mortgage is fixed at 6.25 and I can lower the payments with a direct payment of over $5000 for a $250 charge each time. Therefore, I would go from $195,000 to 145,000. That would in turn lower the payments from around $1200 to *$897. This does not include taxes or insurance. Yes, I could pay off the mortgage but at 6.25%, I feel that caring it along with the tax write off is best at this time.

I have already taken the lump sum pension when I left the company and rolled it to an active IRA. That is included in the total figure of $880,000.

As for the with drawl rate Yes it will be reduced when I start collecting SS. The $42,000 represents the total with drawl starting now and will remain the same when I start collecting SS.

I am somewhat familiar with the different with drawl methods and would surely alter my life style if the existing portfolio should ever start to decrease in a rapid fashion. I realize that financial advisors are somewhat questioned on this web page but I do have one. I respect his advice but make sure I am well aware of the decisions he is making.

Thanks, Runnerr
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Re: Mortgage in retirement.
Old 08-30-2006, 09:04 AM   #4
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Re: Mortgage in retirement.

Your plan looks a little tight to me but you should be ok. I'm not much on mortgages in retirement either. Having VA medical benefits in your hip pocket is a big plus. Does your FP feel comfortable with your plan?
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Re: Mortgage in retirement.
Old 08-30-2006, 10:51 AM   #5
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Re: Mortgage in retirement.

Yes, my FP feels comfortable as I think I do too. You have to realize that I lived on less getting to this point in my life. In addition, to be truthful I think I might feel more at home in a less expensive house. However, I feel that the equity being built in the house will be a plus in the future. I realize it might not gain as much as I hope but all I have to go on is the history of the housing market. I believe we use the history of the stock to predict the future. I will stay in the new house for at least two years than re evaluate.

Thanks Runnerr
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Re: Mortgage in retirement.
Old 08-30-2006, 11:01 AM   #6
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Re: Mortgage in retirement.

Runnerr,

What does your wife think? Is she supportive?

2Cor521
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Re: Mortgage in retirement.
Old 08-30-2006, 11:02 AM   #7
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Re: Mortgage in retirement.

Yes
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Re: Mortgage in retirement.
Old 08-30-2006, 11:43 AM   #8
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Re: Mortgage in retirement.

Quote:
Originally Posted by runnerr
I have access to the VA for medical
What do you mean by that statement?* Unless you are in the enrollment priority 1 class, your "coverage" is limited.* For more info, see:

http://www.va.gov/healtheligibility/...rityGroups.htm

- Ron
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Re: Mortgage in retirement.
Old 08-30-2006, 03:21 PM   #9
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Re: Mortgage in retirement.

Hey I guess I was wrog but the catastrophic policy with a high deductable along with HSA should provet sufficient. Thanks for setting me stright.
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