Should You Pay Off Your Mortgage with Retirement Savings?

Getting Retirement Right with Darrin McComas & Shon Peil

In this episode of Getting Retirement Right, Darrin McComas and Shon Peil discuss whether or not to pay off your mortgage using retirement savings. They reveal the advantages and potential pitfalls, leaving listeners with a tantalizing question: Should you risk your retirement security for the dream of a debt-free home, or is there another path to financial freedom? Find out on the next episode of Getting Retirement Right!

In this episode, you will be able to:

• Explore the concept of trading mortgage payments for a stout retirement stash.

• Gauge the perks of swapping your home loan with your golden-years reservoir.

• Delve into the financial effects of potential mortgage decisions, triggering a fresh approach to home ownership.

• Understand why keeping investments in stocks may outweigh the rush to dip into your nest egg.

• Experience the emotional freedom associated with life sans debt, and how it interplays with your financial health. List 2:

Imagine the peace of mind that comes from owning your house outright and being completely debt free. It's a powerful feeling that can transform your retirement. - Sean Peele

The resources mentioned in this episode are:

• Consult with a financial expert: Talk to a certified financial planner or a fiduciary planner to get personalized advice and guidance based on your unique situation.

• Consider tax implications: Before making any decisions, consult with a CPA or tax advisor to understand the potential tax consequences of using your retirement savings to pay off your mortgage.

• Evaluate your retirement savings: Take a close look at your retirement savings and assess whether using a portion of it to pay off your mortgage is a viable option. Consider your overall financial goals and retirement plan.

• Calculate potential interest savings: Run the numbers to determine how much interest you could save by paying off your mortgage early. This can help you make an informed decision about whether it's worth using your retirement savings.

• Review mortgage terms and penalties: Check the fine print of your mortgage agreement to see if there are any early payment penalties or other terms that may impact your decision. This will help you understand any potential costs or limitations.

• Explore alternative strategies: If paying off your mortgage with retirement savings doesn't seem like the best option, consider other strategies such as refinancing, making extra payments, or downsizing to a more affordable home.

• Assess emotional and psychological benefits: Take into

House Rich, Cash Poor Owning your house outright is a delightful thought, isn't it? But when that ownership comes from depleting your retirement savings, there's a massive downside to consider: it leaves you cash-poor. In simple terms, while you may be rich in assets (house), you could be poor in liquid cash. Shon Peil and Darrin McComas urge listeners to reflect upon this scenario. Darrin and Shon warn that while it might feel good to live without a mortgage, emergencies don't announce their arrivals. They emphasize how being cash-poor can leave you woefully unprepared to meet unexpected financial needs. They also hint at potential stumbling blocks if you plan to purchase a new home in the future due to higher interest rates or costs.

Advantages of Staying Invested Let's talk about keeping your retirement funds right where they are. Imagine a bigger picture where your investment keeps multiplying. Now that's what Darrin and Shon talk about as they move to the merits of staying invested. The stock market, on average, has given higher returns historically, making it an appealing prospect over the guaranteed, but lower, returns of mortgage interest. When referencing the comparison between potential stock market returns and average mortgage interest, Darren cites that the market's 8-9% average rate of return starkly outshines the typical 3% mortgage interest. Remember, this is your hard-earned money we're talking about, and getting the most from it should always be your goal. So, before making quick decisions, think about the potential your retirement savings could have if they stayed put and grew for your future.

Consider State & Local Taxes Lastly, the importance of looking at the bigger tax picture isn't forgotten by Darrin McComas and Shon Peil. They talk about the hidden landmines of state and local taxes that can rear their head when you withdraw from your retirement funds. Through their knowledgeable lens, Darrin and Shon remind their listeners to zoom out from personal tax brackets and also consider the ripple effects on state and local taxes. When taking such a viable financial decision, remember to look past the immediate relief and work through how it's going to affect your finances in the longer run. After all, it's not just about making a decision, it's about making an educated one!

Podcast website: Getting Retirement Right

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