Realistically, when do you think you can retire?

well, i'm at my first job that's not working for myself. so i'm putting in my time till i can get enough experience to get higher pay.

best part of my job is the title i suppose, having 10 direct reports gives that managerial experience too.

 

with interest rates on home loans reaching mid 3s, there is little to almost no incentive to pay off a mortgage quicker. With the average rate of return being significantly higher with investment properties and the market (S&P 500) it may be significantly more advantagous to invest while having a mortgage on your primary residence.

Albeit, some prefer the "low risk" life style but considering your age, you'd be hard pressed to not to invest as early as possible.

The whole principle of paying your mortgage down faster was pushed by our previous generation due to the extremely high interest rates (above 10%) back then.

 

Interest rates are close to 5%. Its nowhere near 3.5%

Either way what you are saying only makes sense when you don’t consider risk.
I’m investing in my retirement at an amount more than sufficient for me to retire. To me it makes no sense to put more in and not just get rid of the house payment.

Taking 30 years to pay off a house results in the loss of over $122,000. I’ve got better use for that money than to just hand it over to a bank.

I want as much of my income as possible so I want as few payments as possible.

Plus with no house payment thats more money you can be investing. You’ll grow weath quicker without a house payment.

 

The most common mortgage is the 30 yr *fixed* rate. Anyone who is still in the same house they were in around 2016 or earlier either has or had the opportunity at a 3.5% fixed rate mortgage.

ARMs of course a completely different story, and personally I think ARMs are more sensible for the average younger buyer who is likely to relocate in less than 10 years. But 30 year fixed is the default still. So indeed for lots and lots of people the interest rate to compare to is 3.5% regardless of what the rate is right now for a new mortgage.

Paying off faster than 30 years at the expense of not filling up tax advantaged accounts first is in itself a rather large opportunity cost as well. Not to mention that if you have a longer term investment horizon the comparable rate of return of your tax advantaged retirement account is higher than 6%. This is why most people pay the minimum on the mortgage and maximize tax sheltered equity investing in the early part of their life.

As to risk also consider a real risk out there is significant unexpected inflation. An unpaid mortgage is a very significant inflation hedge so continuing to hold that fixed rate debt actually hedges one kind of risk.

Not paying down the house is also providing more money you can invest...

There really isn't a clear cut "correct" answer. It is as you said down to risk. But there is more than one kind of risk out there. If you truly wanted to minimize risk of loss you'd invest only in TIPS or short term nominal treasuries. Sadly for most people if they did that they'd hit a different risk - never having their investment grow enough to retire securely.

In general though the standard accepted wisdom is to maximize savings in all tax deferred retirement accounts before paying down the mortgage more. Given the typical investment returns, tax laws and mortgages available to US consumers that is usually the best balance. Individual circumstances can of course differ.

Personally I paid off my mortgage very early, but I was also already maximizing all tax deferred retirement accounts and keep all those investment accounts heavily tilted towards equities. For most folks I wouldn't recommend paying down the mortgage early unless they've maximized IRA and 401k contributions first.

 

The day after my wife dies

 

True about the paying it down. However, it all depends on one's situation.

I really have to pay mine down faster. Reason being, my wife and I are older. I know @PackCon is younger than my 45 and her 57, but I want that thing gone ASAP so she can retire and we can live here off my income until we relocate.

 

As I read (and responded) in this thread, I feel a big question is what are you going to do after you retire? Will you be able to afford a life of golfing, fishing, skiing, hunting, hobbying, and basically spending every day? I qualified to retire 3 years ago with a full 60% pension and 12 years of paid up insurance. Just recently an debt free on EVERYTHING. My issue is what am I going to do with myself. Every year I work I get another 2% of my highest 3 years defined benefit pension. That's a motivation to stay. I'm sitting at 66% right now. I could live just fine but won't have the money to play and hobby every day. I am involved in volunteer work with troubled youth which I can probable do a lot more. Retirement rarely is keeping your same standard of spending or more.

 

Why not relocate and you both work at the new place then pay off that home?


I wish you luck with it.
I think its fun paying down the house. I’ve got a spreadsheet on the fridge and I cross off values and I get to them.
It keeps me motivated.

 

This is an interesting discussion. It just goes to show how different the retirement needs are. If you're putting anything away your doing better then then about 40% of Americans which is pretty sad. I'll be done at 62 and have no desire to continue with my current occupation afterwards for something to do.

 

I got all that with little risk also though. One of my rental properties pays my mortgage and the company I bought pays my truck payment. All about how you spend it. Buying a ferrari and travelling isn't just materials if it's a dream of mine. I'm just saying don't plan on settling, always go further. This whole "risk" thing is something created to scare people from actually learning how the world of money works IMO

 

Take this as a learning situation because I at one point thought the same way but it's not a very good idea to pay the mortgage off. Read what the other guy says below. He has good points

 

I've had this talk several times, I like Ferrari, but would rather have a 911.

Anyways that's not what i'm talking about, I don't want the awesome car for looks, I want the awesome car because I grew up playing Gran Turismo and Forza. I'm not materialistic, I have a 17 truck and still drive an 05 jetta to get 40+ mpgs.

 

I’m paying off my rental mortgage as quick as I can but I’m going to ride my main house mortgage out.

 

is the tax break that good for a mortgage that is your homestead?

 

My parents are still living in MA as well, and I can't leave them as they're in their 70s. I've tried to get them to move and no luck

 

Yeah I agree. Gotta stick with Family,

 

At this point I may be retired by April and that’s actually 1 year longer than my goal. This fall I’ll have 29 years with this employer and luckily I opted to buy 5 additional years of service time when it was offered. I highly doubt I’ll make it until then so I’ll have just shy of 34 years in the system. They do the year in 1/10ths so I may get there but not sure when the year ends. Unfortunately My bosses boss retired this last year and the position hasn’t been filled yet. Things have gone to shit since he’s been gone. All of the managers that reported to him are acting like dogs off the leash and showing exactly why they don’t belong in those positions. I guess the timing is right for me. A friend of mine wants me to do some part time consulting work for him and the pay is too good to turn down. My wife is actually thrilled for me to be retired even though she’s got another 10 years to go. Teachers pension isn’t as good as mine unfortunately.

 

I'm grandfathered in by union contract to my pension. I'm a union steward so I know what I'm getting. I'll be fighting for more in the future.
I'm 27. I only have a little extra scrap after the bills are paid, and because of my wife's condition she doesn't work. So I gotta get by for now till I can free up more income I'm already putting in I think 12%.

 

3557 days, 4 hours and 1 minute.

 

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