donheff said:
But did you actually do an equity take out and invest the extra $200K or whatever in the market?
We kinda backed into it. Over the years it was easier to refinance the mortgage than to cash in a chunk of the ER portfolio.
It's a calculated risk, the long-term odds are in our favor, we don't have any bonds in our ER portfolio, I have a govt pension with a COLA, and we sleep fine at night. But I wouldn't recommend this without an extremely reliable pension or a small mortgage.
FIRECalc claims that we have a good chance to come out ahead over a 30-year mortgage if we invested it in equities, and interest rates have dropped even further since I realized that. What clinched the analysis is that a larger retirement portfolio is generally more survivable, even if that larger portfolio consists partly of invested mortgage money and results in a higher SWR than without it.
You have to run FIRECalc for your original expenses & portfolio, and then run it again with the additional mortgage payments plus the larger portfolio. Our FIRECalc runs tend to be pretty long, 75-80 years, so we probably have less data than most people's runs. But even running a 30-year mortgage through FIRECalc all by itself is generally a winner-- especially at 5.375%.
So last year we decided to keep the mortgage. Its payment (plus utilities, gas & groceries) is
covered by my pension, which is also rising with inflation. Our SWR is higher now but our portfolio will be boosted by my spouse's pension (in 2022) plus Social Security (2022-3).