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re: Am I early retirement ready? Updated
Posted on 7/29/18 at 12:22 am to notsince98
Posted on 7/29/18 at 12:22 am to notsince98
quote:
I'm way too conservative but I wouldn't call myself retirement ready if I had a mortgage. Getting rid of a mortgage is my first requirement.
I think the way I look at it, a mortgage is currently around-- 3.85%? At most, 5%? I haven't checked rates lately, but those were numbers several months back. Money in an index fund is typically going to grow at a better rate than that. I'd rather have money in an index fund growing than have all or most of my assets tied into a house with little or no savings set aside. It would be one thing if there wasn't a pension coming in, but that's not the case.
If emergency cash is the concern, there's always the option of a refi or heloc down the road.
Then again, we're not talking about a McMansion. The OP lives frugally enough, he's not going crazy and buying a 600+k house.
2
Posted on 7/29/18 at 2:26 am to its1999
quote:Right. Home loans have the advantage of an interest tax write-off as well, at least up to a point. So a low rate mortgage can essentially serve as low-cost leverage money plus function as an inflation hedge. Needless to say though, that assumes the portfolio is not sitting with large cash positions.
I'm way too conservative but I wouldn't call myself retirement ready if I had a mortgage. Getting rid of a mortgage is my first requirement.
I think the way I look at it, a mortgage is currently around-- 3.85%?
Posted on 7/29/18 at 9:11 am to its1999
Like i said, i'm conservative. People around here get too obsessed with capitlizing on every aspect instead of having financial freedom (debt free) for my comfort.
When I'm retired, I'm not going to be exposed to volatility. so 5% mortage interest would be a really big deal to my portfolio not to mention constraining my budget by a significant amount every month. Also, mortgage interest won't be a write off for most people these days given the change in standard deduction.
With no mortgage, I could retire sooner, on less savings and have less risk. The time for capitalizing on every dollar is "before" retirement for me.
When I'm retired, I'm not going to be exposed to volatility. so 5% mortage interest would be a really big deal to my portfolio not to mention constraining my budget by a significant amount every month. Also, mortgage interest won't be a write off for most people these days given the change in standard deduction.
With no mortgage, I could retire sooner, on less savings and have less risk. The time for capitalizing on every dollar is "before" retirement for me.
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