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Retiring with mortgage debt: 4 things to consider
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Consider retiring with mortgage debt vs paying off your mortgage before retirement. Many will tell you to pay off your mortgage and many will tell you there are great reasons to have a home mortgage in retirement. There are strong opinions on both sides of the question. You can best solve the dilemma by having a thorough understanding of your financial situation. Don't try to answer this question before you have created a budget with variations.
One item used as a strong reason to buy real estate is now largely irrelevant which is the property taxes and mortgage interest deductions. Since the tax law changed in 2018, the big tax break was given to everyone and in particular, those over age 65 have killed that reason to retain debt. In addition, most people don't understand when you hear someone saying "I will write this off" what that means. The tax cuts have created a situation where the standard deduction covers almost all debt for retired persons.
There is a good chance that your retirement income will not be sufficient to need any tax breaks. This is a good thing in some sense, it prevents people from spending money just to get a tax deduction. Our example of a typical retired person's income and expenses below shows the effect of the 2018 tax changes on your income. I would love to write at length about taxes but you can read one of our articles about how the 2018 tax changes benefited retired people.
Produced by RetireCoast.com please visit our blog article of the same title
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Subscribe to the RetireCoast Podcast for practical conversations about retirement planning, financial preparedness, estate planning, entrepreneurship, and life on the Mississippi Gulf Coast.
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📋 Looking for more advanced planning resources?
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• Estate Planning Membership — Build and organize your legacy with decision tools, trust planning resources, trustee selection guidance, emergency preparedness documents, and more.
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• All Access Membership — Receive complete access to both memberships and our entire premium planning library.
Learn more at:
https://retirecoast.com/estate-planning-membership/
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https://retirecoast.com/all-access-membership/
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By Williamclick here: Leave a text, tell us what you liked
Consider retiring with mortgage debt vs paying off your mortgage before retirement. Many will tell you to pay off your mortgage and many will tell you there are great reasons to have a home mortgage in retirement. There are strong opinions on both sides of the question. You can best solve the dilemma by having a thorough understanding of your financial situation. Don't try to answer this question before you have created a budget with variations.
One item used as a strong reason to buy real estate is now largely irrelevant which is the property taxes and mortgage interest deductions. Since the tax law changed in 2018, the big tax break was given to everyone and in particular, those over age 65 have killed that reason to retain debt. In addition, most people don't understand when you hear someone saying "I will write this off" what that means. The tax cuts have created a situation where the standard deduction covers almost all debt for retired persons.
There is a good chance that your retirement income will not be sufficient to need any tax breaks. This is a good thing in some sense, it prevents people from spending money just to get a tax deduction. Our example of a typical retired person's income and expenses below shows the effect of the 2018 tax changes on your income. I would love to write at length about taxes but you can read one of our articles about how the 2018 tax changes benefited retired people.
Produced by RetireCoast.com please visit our blog article of the same title
Support the show
🎙️ Enjoyed This Episode?
Subscribe to the RetireCoast Podcast for practical conversations about retirement planning, financial preparedness, estate planning, entrepreneurship, and life on the Mississippi Gulf Coast.
👉 Visit RetireCoast.com for in-depth articles, calculators, decision tools, checklists, and guides that expand on the topics we cover in each episode.
📋 Looking for more advanced planning resources?
Explore our membership programs:
• Estate Planning Membership — Build and organize your legacy with decision tools, trust planning resources, trustee selection guidance, emergency preparedness documents, and more.
• Business Builder Membership — Access tools and resources designed to help entrepreneurs, retirees, side-hustlers, and small business owners start, manage, and grow a successful business.
• All Access Membership — Receive complete access to both memberships and our entire premium planning library.
Learn more at:
https://retirecoast.com/estate-planning-membership/
https://retirecoast.com/business-builder-membership/
https://retirecoast.com/all-access-membership/
💬 Have a question or a topic you'd like us to cover?
Email: [email protected]
...