Browsing: paying off mortgage

Q. Do you happen to have any articles about the pros and cons of paying off the mortgage in retirement? We had paid off ours. But we moved to downsize before selling the bigger house. So we took on a VA mortgage at a relatively low interest rate last November. When we sell the big house, we have two options: Keep the mortgage and invest all the money, or pay off the mortgage and invest the balance. I retire in January 2013, and our pension income will be half our current income. Is there a “calculator” to evaluate the choices? A.…

Q. You made the following statement in a recent column on common mistakes regarding retirement: “Think paying off your mortgage in retirement is important in achieving the highest standard of living possible? It’s probably not.” Why?  I’ve always thought the opposite — that you should have your mortgage paid before you retire. Can you share your thoughts on this subject? A. You’ll find a transcript of a column I wrote on the subject here: http://www.variplan.com/uploadedDocuments/1277733522Carrying_mortgage_into_retirement_can_pay_off.pdf. Basically, the reason is that paying off your mortgage can tie up funds that you may need later to pay your bills — the bills for your…

Q: I wanted to have my house paid off by the time I retire in 2025. I am over 50, and the yearly payment needed to pay off my house would equal my Thrift Savings Plan catch-up contribution; I can’t do both. Would you recommend paying off the house or paying more into the TSP account? A: It depends upon your assumptions about the future and your circumstances. With what little I know about you (virtually nothing), I can only recommend that you carefully consider keeping the mortgage and making the TSP contributions.