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Started By
Message
What to do with $250K
Posted on 9/15/18 at 11:03 am
Posted on 9/15/18 at 11:03 am
I’m 65 and not willing to take a big risk. I will retire in May, 2019 with combined pension with my spouse of $100K. I am selling land which will bring $253K. I assume I will have to pay 15% long term Cap Gains tax.Everything is paid off except a mortgage that is just under 4%. I owe $190K on the House and my monthly note is $1,498. . Would I defnitely pay off the mortgage?
11
Posted on 9/15/18 at 11:16 am to NorthTiger
At your age you probably would like less risk. Have you considered CD Laddering?
Posted on 9/15/18 at 11:25 am to NorthTiger
Personally, Id go ahead and just rid myself of the mortgage. It may not be the best choice mathematically, but being retired with no payment and 60k of it still in the bank would be a nice feeling.
Posted on 9/15/18 at 11:27 am to Mingo Was His NameO
Yes, get rid of that note and any other debt. It frees you up to only have to worry about living expenses and taxes. Easier to manage with social security and and maybe a part time job if necessary
Posted on 9/15/18 at 11:33 am to NorthTiger
DO you have any retirement accounts?
dividend payers?
income producing RE?
you need to use that money for income.
dividend payers?
income producing RE?
you need to use that money for income.
Posted on 9/15/18 at 11:34 am to Mingo Was His NameO
quote:
It may not be the best choice mathematically
It isn't.
quote:
being retired with no payment and 60k of it still in the bank would be a nice feeling.
It's even a better feeling to have more net worth.
Posted on 9/15/18 at 11:35 am to Mingo Was His NameO
his house note would be fine IF, IF he had a nice stream of income that could easily pay for it and other bills. it appears he has not built that yet or has that. since he does not then maybe it is best to pay it off
Posted on 9/15/18 at 11:39 am to NorthTiger
Is your annual income from the pensions of both you and your wife $100k? If so, don’t pay off the mortgage.
Posted on 9/15/18 at 11:42 am to Fat Bastard
quote:
IF he had a nice stream of income that could easily pay for it and other bills.
He said he and his wife have 100k worth of pension.
This post was edited on 9/15/18 at 11:43 am
Posted on 9/15/18 at 11:50 am to Fat Bastard
He has $100K pension...that’s the definition of an income stream. Your answer in every thread is real estate regardless of the situation.
To the OP, I would personally pay off the mortgage. 4% risk free return isn’t terrible.
To the OP, I would personally pay off the mortgage. 4% risk free return isn’t terrible.
Posted on 9/15/18 at 11:57 am to foshizzle
quote:
It's even a better feeling to have more net worth.
Nothing he said would have any affect on his net worth.
Posted on 9/15/18 at 12:01 pm to Jag_Warrior
Meh, 65 is still pretty young. If you like the feeling of having the house paid off, go for it. I personally would rather the money growing especially with that size of a pension. I think a balanced portfolio would serve you well. You still probably have 20-25 years on this earth.
Posted on 9/15/18 at 12:11 pm to foshizzle
quote:
It's even a better feeling to have more net worth.
This statement confuses me. Can you explain?
Posted on 9/15/18 at 12:22 pm to lynxcat
quote:
He has $100K pension...that’s the definition of an income stream. Your answer in every thread is real estate regardless of the situation. To the OP, I would personally pay off the mortgage. 4% risk free return isn’t terrible.
The $100K guaranteed pension is for both my wife and me. We have an annual COL of approximately $85K.We will have a cash reserve of $75K next May when I retire. Yes, having no debt is appealing and I have always heard “never use cash to pay off a lower interest rate than you could get by investing at a higher percentage”. In this case it seems like paying off a $190K mortgage that frees up $18K a year seems like a 9.5% return on that $190 (9.5% X $190,000 = $18,050/annually). The mortgage has 20 years remaining on it so it’s not like I’ll pay it off any time soon.
Posted on 9/15/18 at 12:45 pm to NorthTiger
quote:
I have always heard “never use cash to pay off a lower interest rate than you could get by investing at a higher percentage”
That really depends on the types of investments that you're funding with that debt - and really, that is what you're doing by investing the cash and keeping the mortgage. It also depends on your age or time horizon. At age 65, will that $190K or whatever be in higher risk/higher return or lower risk/lower return investments? If you're in equities and the investment account drops by let's say 25% over a couple of years in a bear market, would you be OK with that? You might be. I don't know. But that is one question I would ask myself.
You sound like you're in a good, stable income situation going into retirement. So I don't think there's a clearly right or wrong answer here. Unless I had plans to sell the residence in the next few years and downsize, I'd probably pay it off. But that's just me.
Posted on 9/15/18 at 12:46 pm to Janky
quote:at his age, a balance portfolio that returns 4% (his mortgage rate) isn't bad. So paying off the mortgage in this case isn't a terrible idea, mathematically. And then you can add peace of mind of you want.
I think a balanced portfolio would serve you well.
Posted on 9/15/18 at 12:47 pm to NorthTiger
I would pay the note off and be done with it...
Posted on 9/15/18 at 12:52 pm to Jag_Warrior
quote:
Unless I had plans to sell the residence in the next few years and downsize
Great comments here. Thank you guys so much. I have no intention of ever leaving this house unless I’m forced to. I have a long term health care policy.
Posted on 9/15/18 at 12:56 pm to castorinho
I would expect a balanced portfolio to return better than 4% over time.
Posted on 9/15/18 at 1:14 pm to Janky
quote:Not that much better if that includes 40-50% cash.
better than 4%
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