Comments on: Save for Retirement Now or Payoff Your Mortgage First?

By: Kevin M

Kevin M — Mon, 18 Apr 2011 17:02:26 +0000

Jackie – You’re bringing up an outstanding point on retirees renting. While I don’t think there’s one answer for everyone, I do think renting is a better option for a lot of seniors on a number of fronts.

For one thing, renting means you don’t have to make repairs. Not only does that save money, but it also leads to a simpler life. A lot of retirees like to travel, others have health problems–home repairs are a distraction and an extra expense in both situations. The tenant doesn’t have that problem. Then there’s cutting the lawn, shoveling snow, etc–I don’t think I want to do those when I’m retired! And if you can’t…then there’s an extra expense.

As to the purely financial side of it, everyone thinks in terms of owning as a way of living “rent free” once the mortgage is paid. I have a few problems with that concept. For one thing, you will still have taxes, insurance and the aforementioned repair and maintenance costs. But beyond that is the financial opportunity cost. When you own a house, a lot of capital is tied up in it. Sure you might not have a mortgage payment, but you also aren’t earning any money on it. It kind of cancels out.

Now right now with interest rates as low as they are, that makes sense. But if rates on savings return to historic norms, it won’t look so good any more. The problem is magnified in high cost areas, where hundreds of thousands of dollars are tied up on bricks and mortar, rather than in financial assets earning income.

That’s just an opinion, and one I might be writing a post on very soon!

By: Jackie at Brookfield

Jackie at Brookfield — Mon, 18 Apr 2011 16:48:03 +0000

Savings/investments over mortgage because the time will allow you to build interest. I am curious as to what you think about retirees will have to rent or don’t have plans to buy a home because they are single and won’t have a need for a lot of room? I know many people who live in So Cal and will not be able to afford to buy ever.

By: Kevin M

Kevin M — Sun, 27 Mar 2011 16:55:24 +0000

401k – Yes! If you can’t take care of yourself, you’ll never be able to pay your debts anyway!

On the error, it looks like you made two comments, and BOTH ended up in the spam filter! Wish there was a better way to deal with spam, but we’re all at the mercy of common systems.

By: 401k Rollover

401k Rollover — Sat, 26 Mar 2011 23:55:01 +0000

great article! Like you…i’m in favor of saving before paying off debt. The way I see it if poop hits the fan i want to be able to take care of MYSELF first. Everyone else (debt collectors) come in second. typically people get in financial binds because they haven’t saved. One bad situation comes up and it snowballs.

I think if your mortgage payment is manageable and you have a good % rate, invest in your retirement for sure!

btw – your site seems to be registering an error?

By: Alston

Alston — Thu, 17 Feb 2011 13:57:50 +0000

the equation is very simple… a paid for home is far solid than money into somebody Else’s hand. besides with so many scandals out there nowadays….
Alston´s last [type] ..Life Insurance For Over 50

By: brettmeyer@HomeLoanFinder.com.au

brettmeyer@HomeLoanFinder.com.au — Wed, 22 Dec 2010 02:15:56 +0000

Two equally important options to choose from. Wow, now you got me thinking! My number one agenda is to save and what will effectively help my present situation and my future is definitely something to think about.

By: omgloan

omgloan — Tue, 21 Dec 2010 20:00:22 +0000

Which option to choose really depend on how your current and future (if you know it) financial situations. I am not trying to pay off my mortgage at the moment, I want to use the spare bit of cash to try different investment.
omgloan´s last [type] ..What are Buy to Let Mortgages

By: Kevin M

Kevin M — Fri, 29 Oct 2010 22:09:08 +0000

Marty – One of the points in the post is that paying off debt usually has a greater positive impact on cash flow than saving up an equivalent amount of savings. If paying off $10,000 in debts will eliminate $500 a month in payments, that’s a whole lot of cash flow for a relatively small investment.

We’re all concerned with maximizing income for retirement, but lowering outgo is just as important–even more so if you have limited resources.

By: Marty Fogarty @ War Veterans Benefits

Marty Fogarty @ War Veterans Benefits — Fri, 29 Oct 2010 18:59:40 +0000

In my opinion, savings for retirement should be carefully planned to make sure that retirement will not be a troublesome situation in a financial sense, up to the point where a person doesn’t have enough money to survive for long. It is hard to save when one has debts to pay, but with a wise usage of money, I do think it’s possible.

By: The Current Mortgage Rate Guy

The Current Mortgage Rate Guy — Sat, 07 Aug 2010 02:08:02 +0000

I agree with you it depends on personal preference and comfort. The current interest rates and potential returns on investments also need to be considered. Many people do both at the same time, the hybrid option, I think its because they don't know which one to focus on. .-= The Current Mortgage Rate Guy´s last blog ..Current Florida Mortgage Rates – Florida Mortgage Rates =-.