Excited, yet unsure....

[Skye]

Hi, this is my first post....I just joined today! And I will be retiring in 2 months! There is something I would like to ask, and maybe someone will have some thoughts on this. I will be retiring with a substantial mortgage on my home.

However, I will have more money in retirement than I had while working, which gives me two options. I can continue to pay my mortgage for 28 more years, and I will have plenty of money to live the way I like in retirement. OR I can take this extra money, approx. $1,000 to $1,500 a month, and put it towards the mortgage. If I did that, it could be paid off in as little as 8 to 10 years. I would not have as much money to spend, but, I live a simple, outdoorsy lifestyle anyway.....a jeans and tee shirt girl.

On one hand, I feel why should I short myself....keep payng down the 28 yr. mortgage, and have more $ on hand. BUT, on the other hand, I think, who knows what the future will bring, property taxes may go way up.......pay it off while I can, and have more peace of mind later when I have no mortgage! And I may really need that money and be thankful I don't have a mortgage to pay! Any thoughts?

 

[Purron]

Welcome and congraulations! Here's what I'd do. Nothing right now. I'd wait until about 6 months after retirement then take another look at this. By then, you'll have a better idea of post retirement finances.

 

[Amethyst]

However, I will have more money in retirement than I had while working.... Any thoughts?

Welcome aboard, nice screen name too. I can't tell you whether you should pay off your mortgage, but I do wonder how you worked the miracle of having more money in retirement

Amethyst

 

[walkinwood]

Do a search here and you'll find detailed threads on paying / not paying off your mortgage.

If you decide to continue with a mortgage, try to re-finance (if you can get a lower rate) before you retire.

Welcome to the board. All the best with your retirment.

 

[obgyn65]

Congratulations Skye. Welcome to this forum.

And I will be retiring in 2 months!

 

[Gumby]

Welcome aboard, Skye. When I read your name, I thought of this poem

Sing me a song of a lad that is gone,
Say, could that lad be I?
Merry of soul he sailed on a day
Over the sea to Skye.

-- Robert Louis Stevenson

Enjoy your retirement and don't be shy about jumping in here.

 

[jdw_fire]

welcome skye,

my 1st thought is how are you getting your retirement income? if, for instance, it is a federal pension w/o any other significant assets, i would be more inclined to not increase the payment on the mortgage. whatever your assets i would not decide to pay it off until after a while so you can get a feel for retired life and it's expenses.

 

[Nords]

I'd wait until about 6 months after retirement then take another look at this. By then, you'll have a better idea of post retirement finances.

Coincidentally it'll take you about that long to read through the extensive discussion archive on the subject:
http://www.early-retirement.org/for...f-the-mortgage-or-invest-the-money-30644.html

 

[militaryman]

I would take it month to month ..... If you have an opportunity to do something great and need the extra $$ then that month don't pay the extra but other months where you have the extra then chunk it against the mortgage.

 

[Skye]

Thank you all for the welcome and the responses! Gumby, Yes, Skye is from the Isle of Skye in Scotland.

 

[martyp]

How old are you?

The math for paying off your mortgage early usually looks pretty good. I am also retiring in about 2 months but my house will be paid of in 3 years.

 

[Moemg]

Welcome ! I second Purron's idea to look it after you've been retired awhile .

 

[Skye]

Hi...........It came to me.....doesn't that often!.....That I think I will save the extra money for awhile....say, save up $20,000 to $30,000, for emergencies....And after I have a little stash, put the extra toward the mortgage. I really don't have any cash.....but I am getting a home equity line of credit just for emergencies, but even so, I think it would be a good idea to have a few months living expenses put away, along with the line of credit, if I really needed it. I do have Plan A, B, C, D, and E if all goes wrong......Plan E is moving to my friend's campground in North Carolina, where I can buy a trailer and pay rent of $1,800 a year.....that's $150 a month! Not that I want to move from the Northeast! But, I'd have LOTS of $ then.....and they have a pool, etc......

 

[msully76]

Don't worry

Hi,

I have just received my first retirement check today and am in the process of refinancing my mortgage for 30 years @ 4 %. My feeling is that why not take advantage of the low rates even though my payment will be over $2000 per month. If I feel that it ever gets too much I can sell but for now I can handle this. I considered a condo to lower the payments but decided to stay put. I am two months into this retirement and it is great.

 

[Orchidflower]

but I do wonder how you worked the miracle of having more money in retirement

Amethyst

I've heard Police say this, also. Part of their deal is they get cushy retirements if they stay for X number of years...not bad, tho, when you get to be my age and look back.

 

[Rambler]

I really like being mortgage free myself, but everyone has their personal comfort level for debt, mortgage or otherwise.

That said, I really like the advice by militaryman and others to just wait for 6 months, and as Nords said, it will take you that long to read the threads on the pros and cons of paying down the mortgage. Then, when you have a little extra leftover at the end of the month (on top of a cash cushion) why not pay a little extra on the mortgage? You may find that you are comfortable, and able, to pay it down in 14-15 years rather than 28. Then again, if you have a very low rate mortgage, and if this is beneficial to you from a tax and financial standpoint, there is no reason to pay it off early.

As an example, if you had a 4.25% mortgage, and a 5% yield long term muni bond, AND a tax deduction on the mortgage that was worth a couple thousand in tax savings, why would you want to sell the bond and pay down the mortgage? In this case it is beneficial to you to keep the bond, keep the mortgage, and keep the tax incentive. You end up with more money in your pocket every month. It really depends on what assets you have, and which of those you would be selling to pay off the mortgage.

So, read up, play it safe for a while, then decide.

R

PS: congrats on your upcoming retirement, and enjoy the outdoors!

 

[Skye]

Well,...Thanks for all the good insight and thoughts! I am not very good at finance stuff,...but I went to the IRS tax table and worked through senarios of no mortgage and with mortgage and interest deductions. It seems to me, I WOULD actually have less cash with no mortgage interest to deduct because I would have to pay more federal taxes......BUT....even though my monthly amount is less, I would actually have MORE to spend, because I would not have to pay $1460 to my mortgage! So, it does seem better for me to get rid of it sooner, rather than later. If my mortgage is gone, and my property taxes go up to $1,000 a month, (which some day I am sure they will) I would be able to handle it if I no longer had a mortgage to pay. And I could stay in the house I am in now, if I wanted to. So, that is probably the main reason I think I should try to pay it off.

But all I KNOW is 7 more weeks and I don't HAVE to go to work! WOOHOO!!

 

[msully76]

Mortgage, no mortgage

Skye,

You can do all the numbers many different ways and there will be many who will offer advice but you need to do what is most comfortable for you. Although I prefer to have a mortgage that doesn't mean it is for everyone. I just prefer to keep my cash available at this time. Good luck