Social Security and Paid-off Mortgages?

[joeea]

I'm wondering what folks have done (or plan to do) regarding two topics that are frequently discussed in relation to retirement - Social Security and Paying Off Mortgages?

Specifically:

• At what age did you start claiming (or do you plan to start claiming) your Social Security benefits?
• Did you pay off your mortgage before retirement (or do you plan to do so)?

 

[RobbieB]

Plan to claim on my own account at FRA. Now collecting on deceased wife's account.

Mortgage paid off well before I retired, about 8 years

 

[Car-Guy]

Specifically: At what age did you start claiming (or do you plan to start claiming) your Social Security benefits?

62 - The DW will start her's at 62 too.

Did you pay off your mortgage before retirement?

Absolutely, at least 10 (maybe 15) years before I retired. I've forgotten. It's been a long time since I had a house payment. (or any payments for that matter)

 

[euro]

Plan on SS at 62

Paid off the home we live in but established a HELOC. Plus, have plenty of mortgages going on rentals

 

[2017ish]

70 for the higher earner (DW); haven't finally decided on mine, but leaning slightly toward 70 as well.

Retiring in July; refinanced to a 15 year note (2.75%) in Oct. and set up a 200K HELOC (1+% below prime) in March.

 

[rodi]

Paid off the mortgage right before retirement... We'd been paying it down, aggressively, for about 5 years prior to retirement... and lump summed the final $30ishK so that the retirement spending would be simpler.

As for SS - I've run every option through my retirement plans... all work. I expect to claim it sometime between 62 and medicare age. I want to lock in the cap on medicare increases. That's the one issue that makes me thing the waiting till 70 might not be the best bet. But I plan to be flexible in my decision... If I need an income stream to supplement my withdrawals before I hit 65... I'll take it sooner. If not, I'll let it grow.

I'm also planning on staying flexible with regard to mortgage... I have a HELOC in place, no plans to pull any cash out... but I'm not adverse to the idea if I need to do so for cash flow reasons.

 

[Teacher Terry]

I will take it at 66 which is my FRA. We paid off our mortgage but recently decided to pull out a 100k with a 30 year mortgage because rates are so very low.

 

[pb4uski]

Will either both claim at FRA or DW will claim at FRA and I will wait until 70 (I i.had much more earnings than DW). Meanwhile, since we are now both 62 SS is available to us should the stuff hit the fan with respect to our investments and we want to start it.

No... in fact we did the opposite.. we refinanced from 4.375% to 3.375% just before I went off of payroll.

 

[nun]

I paid of my mortgage a couple of years before I retired at age 53.

I will take US SS at age 62 and UK SS at age 67

 

[CaptTom]

But I plan to be flexible in my decision... If I need an income stream to supplement my withdrawals before I hit 65... I'll take it sooner. If not, I'll let it grow.

Ditto that for my SS plan.

Paid off the mortgage several years before ER. Having been deep in debt once, I'm not a big fan of any kind now. It's an emotional thing. I know there are logical reasons to use debt.

 

[CardsFan]

At what age did you start claiming (or do you plan to start claiming) your Social Security benefits?

Plan is FRA for both of us (4 yrs away), but we will be flexible if the market tanks.
At FRA we project SS will cover 60-70% of our expenses.

Did you pay off your mortgage before retirement (or do you plan to do so)?

Mortgage was paid off about 8 years prior to retirement. Not because we made a huge payment, but because our payment plan was structured to get us there. As others have said, I do not see a problem carrying an on going mortgage into retirement. But I would not get a new mortgage in order to invest the money. I know a guy that did that around 2007. It wasn't pretty. I don't know if he held on long enough to get back to even, but I suspect he did not.

A HELOC, particularly if you have a high value home, just in case you need short term cash makes sense. For us, since we down sized, we kept a portion of that in cash. No need for the HELOC.

 

[stepford]

Paid off mortgage in last year of full employment. Lower tax bracket in retirement made mortgage deduction less of a benefit.

My (smallish) pension is not COLA'd so I'm inclined to maximize SS, which is. Current plan is to delay until 70, but that's a long ways off and may be adjusted depending on fiscal and political developments.

 

[Alan]

Paid off mortgage 10 years before ER.

DW will take SS later this year age 62.

I will take U.K. SS at FRA (67) and US SS at 70.

 

[Walt34]

I had originally intended to take SS at 62 in part because the pension options we chose called for the pension to drop by the then-expected SS benefit, keeping the income level. However, I later stumbled into a nearby low-stress job that more than covered what the SS benefit would be so I put SS off until FRA at 66. I quit the job ~2 years before age 66 and we just made up the difference from savings.

Oh, and we paid off the house near D.C. about 18 months or so before I retired. It wasn't planned, really, we just didn't like having the debt so we were making extra payments on the principal. The house in WV cost less (although it is much nicer) so we just paid cash.

 

[ShokWaveRider]

Mortgage paid off in 1995 - 1997 in high earning years. worth every penny.

 

[Taxman59]

Retired with 2 1/2 years left on mortgage (2.875% rate was hard to justify paying off). Planning to take DW's SSI at her age 62, then I will take at FRA and hers will bump up to 50% of mine.

 

[bbbamI]

At what age did you start claiming (or do you plan to start claiming) your Social Security benefits.

Did you pay off your mortgage before retirement (or do you plan to do so)?

DH applied at 62 last year. I'll apply at 62 in 2 1/2 years.

Paid off the mortgage in March, 2006...three years before DH retired (I was already retired).

 

[fosterscik]

Planning to take DW's SSI at her age 62, then I will take at FRA and hers will bump up to 50% of mine.

Be careful with this plan. Anyone claiming before FRA can only claim a reduced portion (<50%) of the spouse's benefit. From the SS site:

A spouse can choose to retire as early as age 62, but doing so may result in a benefit as little as 32.5 percent of the worker's primary insurance amount. A spousal benefit is reduced 25/36 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month

 

[W2R]

• At what age did you start claiming (or do you plan to start claiming) your Social Security benefits?
• Did you pay off your mortgage before retirement (or do you plan to do so)?

Social Security: Age 70. Until then, divorced spousal benefits.

Mortgage: Paid off three years before I retired.

I am female with several centenarians in my family tree and have had relatively good health most of my life. I tend to be risk averse.

Others make different choices than I do, with excellent reasons to do so.

 

[ABQ2015]

I paid off my mortgage a couple of years ago and am now saving the extra money to build up an emergency/cash fund. It may have not been the best financial decision but I did not want a mortgage in retirement. I'm looking into getting a HELOC.

I'm 62 in September and debating on when to start SS. I'm single and have a good sized pension with COLA so don't see the need for another large annuity. My elders lived until mid 80's and my health is okay but not great. FIRECALC and i-ORP don't show much of an advantage in delaying (e.g., maybe $1-2K a year extra income by delaying). I plan to do some calcs to determine impact of SS timing on federal and state taxes, Medicare Part B premiums, and my 401k. I may go ahead and delay SS, withdrawing more from my 401k, until a market correction and then start SS so as to preserve my investments.

 

[joeea]

Interesting! The answers are all over the place.

Virtually all the studies I have read and calculations I have done show that claiming at 70 (at minimum for the higher earning spouse) is financially optimal, when you have the means.

And I've seen compelling arguments that financially (not "sleep better at night" arguments) say that carrying a mortgage into retirement makes sense.

My current plan:
- Wife and I both take SS at 70.
- We carry a 3.875% mortgage into retirement

Both choices can easily be altered if our financial situation (or governmental rule) changes unexpectedly. But I think this gives us the most wealth and liquidity in the long run, along with longevity protection.

 

[2017ish]

Interesting! The answers are all over the place.

Agree that the responses are interesting, but it doesn't surprise me given past discussions. ...

Both choices can easily be altered if our financial situation (or governmental rule) changes unexpectedly. But I think this gives us the most wealth and liquidity in the long run, along with longevity protection.

You are far from alone in this--on this forum. It is one thing to choose between the options in these two areas and quite another to "have to" go into retirement with a mortgage and "have to" take social at 62. (Not saying that "having to" means someone is doomed, but it's a different story when one is in a position to weigh the options and, for example, choose to not write a check for the loan payoff.)

 

[Ready]

We paid off our mortgage before I quite my job in 2013. I would not have felt comfortable having a mortgage and quitting.

For now our plan is to both take SS at 70. We are both in reasonably good health and believe we will live past 82, which is roughly the break even point. And, we need as much time as possible to convert our Traditional IRA to a Roth IRA, and want to be in as low an income bracket as possible to do so. So delaying SS until 70 just gives us a few more years to do so.

 

[Hyperborea]

I paid of my mortgage a couple of years before I retired at age 53.

I will take US SS at age 62 and UK SS at age 67

I've also got two SS type payments - US and Canada. My thinking is to take the smaller one at the earliest possible age (Canada at 60) and the larger one at the latest possible age (US at 70). That way I minimize the amount of the WEP reduction and get the other benefits of delaying. Of course, that could change if circumstances between now and then change since I'm only 52 now.

As for the mortgage question in the original post, we retired last year and haven't paid it off yet but we will be selling it and moving next year. From there no mortgage going forward.

 

[SheitlQueen]

Started taking widow's benefits at age 61 and will switch to my own when I turn 70.
We paid our mortgage off when we were in our thirties and was one of the best moves we made. So glad I don't have a mortgage payment hanging over my head; it might have prevented me from retiring.