Early retirees - did you pay off your house?

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Early retirees did you pay off your house prior to retiring?

Yes - paid mortgage off prior to retiring
49
72%
No - I did not pay mortgage off prior to retiring, and did not for a long time
12
18%
No - I did not pay it off prior to retiring, but paid it off within the first year.
7
10%
 
Total votes: 68

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LH
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Early retirees - did you pay off your house?

Post by LH »

Early retirees, defined here as < 60 at time of retirement/partial retirement, did you pay off your house prior to retiring?

Please comment if about your age at retirement, and what factor is any, paying off the home played into early retirement.

thanks,

LH
Retread
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Re: Early retirees - did you pay off your house?

Post by Retread »

You need another category - took out a new mortgage after retirement.
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sans souliers
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Re: Early retirees - did you pay off your house?

Post by sans souliers »

When I retire next year at 60, I'll have about 13 years left to pay off $95k @ 3.25%
That $95k has some work to do yet.
Sometimes pessimism leaves me pretty well prepared for when things don't go my way, and pleasantly surprised when they do.
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Jake46
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Re: Early retirees - did you pay off your house?

Post by Jake46 »

Paid off my mortgage a few years before retiring at age 60. Primary reason was piece of mind - wanted to be completely debt free before retiring. Six years after retiring, still debt free.
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Info_Hound
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Re: Early retirees - did you pay off your house?

Post by Info_Hound »

Retired at age 60. Prior to retiring I sold my house then used the proceeds to pay cash for a new house in another state (more financially retiree friendly) which is where I now to live.

Living without a mortgage is a wonderful experience. It lets me sleep soundly at night, provides financial piece of mind and simplified day to day finances. :moneybag

It also allowed my living expenditures to drop dramatically when I retired. :sharebeer
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plannerman
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Re: Early retirees - did you pay off your house?

Post by plannerman »

We had no mortgage when I retired. 9-months later, we bought a house in NC with a mortgage. 6-months after that we sold the house we were living in in NJ. At the time, I was able to buy a CD paying a higher interest rate than I was paying on the mortgage, so I purchased the CD. 3-years later I redeemed the CD and paid off the NC mortgage.

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heyyou
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Re: Early retirees - did you pay off your house?

Post by heyyou »

Most early retirees have longer to worry about whether the portfolio will last, so paying off the mortgage is part of pre-retirement planning. Late in the mortgage, the payment is mostly principle so you do not get as much of a tax deduction, but you do have the cash leaving, so payoff looks right. Does the math support that apperance?

When I paid off my mortgage, I started making the same size of payment into my taxable savings account since the 401k and IRA were both already being filled to the top. Didn't want any hedonic adaptation to more spending. The last few years of working, we were practicing living on our retirement income (saving the rest), so there was no income change upon retirement.
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cheese_breath
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Re: Early retirees - did you pay off your house?

Post by cheese_breath »

Retired at 56 and kept making my regular mortgage until it was paid off about four years later.
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Kevin M
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Re: Early retirees - did you pay off your house?

Post by Kevin M »

Not only did I pay off my home mortgage, but also the mortgages on three rental properties before retiring at age 55. I actually never really thought about this particular aspect when I was making the decision to retire early, nor did any thoughts about early retirement factor into paying off the mortgages. It always just seemed like a solid, conservative investment as I was paying them down.

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Re: Early retirees - did you pay off your house?

Post by livesoft »

If an early retiree lives in a paid-off house, then they do not need the cash-flow to pay mortgage or rent which in turn means lower withdrawals from a portfolio which in turn means lower taxes which in turn means more Roth conversions in a low- to no-tax bracket which in turn means no or low RMDs later which in turn means low or no taxes when receiving SS benefits.
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cheese_breath
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Re: Early retirees - did you pay off your house?

Post by cheese_breath »

heyyou wrote:Most early retirees have longer to worry about whether the portfolio will last, so paying off the mortgage is part of pre-retirement planning. Late in the mortgage, the payment is mostly principle so you do not get as much of a tax deduction, but you do have the cash leaving, so payoff looks right. Does the math support that apperance?
I think it comes down to what interest rate you are paying on the mortgage compared to what you could earn investing the payoff money instead.
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Tycoon
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Re: Early retirees - did you pay off your house?

Post by Tycoon »

We paid off our house 10 years after purchasing it mainly because Chase Manhattan told my wife they would charge us to refinance. They refused to negotiate the closing costs. Chase lost a lot of money that day because of a small "appraisal" fee. It felt so good we paid off the car soon after.

We bought a car last weekend and to get the best price we financed it. Going to pay the loan off tomorrow :mrgreen:
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Toons
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Re: Early retirees - did you pay off your house?

Post by Toons »

Yes house was paid off before retiring,sold home moved to Tennessee ,downsized and paid cash for the one we moved to and had cash left over,invested it with Vanguard :happy
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Boglenaut
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Re: Early retirees - did you pay off your house?

Post by Boglenaut »

I am not retired, but if I were I could not answer your poll. I have never had a mortgage and don't plan to have one by the time I retire.
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zed
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Re: Early retirees - did you pay off your house?

Post by zed »

While still a wage-slave paid off the house at 47. Sold it at 49 (2009) rolling the proceeds into a 50/50 AA at what fortunately was the bottom of the market. Have since been a happy renter. Am retiring in October of 2013 at 53. Might buy again or not, cash or mortgage, I dont know.
Buying for cash takes my SWR from 2.5% to 2.18% and oddly my expense/asset ratio from 40x to 45x.
Residential real estate is a consumptive item -- your mileage may vary.

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danwhite77
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Re: Early retirees - did you pay off your house?

Post by danwhite77 »

I am not retired, so I didn't answer the poll. However, with the future in mind, I paid cash for our house last year. I certainly could have bought a large house and taken out a nice, big mortgage, but chose to go the conservative route. Before buying the house, we rented, so thus far I've only had a mortgage for the 2005-2009 years.
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Re: Early retirees - did you pay off your house?

Post by magazinewriter »

I paid off my house at age 50, retired at 55.
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Steelersfan
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Re: Early retirees - did you pay off your house?

Post by Steelersfan »

I didn't fit into your poll.

I retired at 60 and paid off my mortgage two years later, about ten years ahead of time.

I'm happy I did, although in the grand scheme of things, other decisions mattered much more.
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Peter Foley
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Re: Early retirees - did you pay off your house?

Post by Peter Foley »

My goal was to pay off the mortgage before my two daughters entered college. That was a full 10 years before we retired. That approach allowed us to maximize savings for retirement during our highest earning years.
musbane
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Re: Early retirees - did you pay off your house?

Post by musbane »

Retired 12 years ago at age 53. Immediately put the house up for sale. When it sold ( took a year - dot com and WTC and all that) I payed off mortgage on house, boat and land. Then we moved onto the sailboat and bought an rv for the winter.
The Wizard
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Re: Early retirees - did you pay off your house?

Post by The Wizard »

cheese_breath wrote:Retired at 56 and kept making my regular mortgage until it was paid off about four years later.
Similar plan here, retiring 6 months ago at age 63, not all that "early". :(
Net retirement income presently a tad more than net working income so no financial stress at all.
When paid off in a few years, the extra $1000 a month should easily cover any inflation for this decade...
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kramer
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Re: Early retirees - did you pay off your house?

Post by kramer »

I retired at age 41 (single) and have never owned property so no mortgage and I could not participate in the poll.

By living off capital gains and dividends, my income tax bill is zero.
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Re: Early retirees - did you pay off your house?

Post by scrabbler1 »

I paid off my mortgage in 1998 when I was 35. I had taken out the mortgage in 1989 when I bought my co-op apartment. In 1992, I refinanced it to drop the interest rate nearly 5 points. By 1998 it had crept up a few points but the tipping point was when I figured out that I would lose the ability to deduct the interest on my state income taxes (take the SD instead). This was a key step toward semi-retiring in 2001 (work part-time) then fully retire in 2008 at age 45.
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Re: Early retirees - did you pay off your house?

Post by Professor Emeritus »

The benefit of owning your own house in retirement depends heavily on cash flow and liquidity issues. If your house is more than 25-30 percent of your total "wealth" or "income" (reducing all assets or income streams to the same measure ) you are probably "over housed" or "house poor" on most measures. But as with anything it is a matter of personal choice
Our house is about 20% of our "total wealth" . So it works nicely
ragabnh
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Re: Early retirees - did you pay off your house?

Post by ragabnh »

House paid off October of last year, will retire next year August at age 58, renting the house currently, as I work overseas at this time, once I am back I will buy a new house for cash and keep the rental property for generating money during retirement.
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frugaltype
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Re: Early retirees - did you pay off your house?

Post by frugaltype »

I paid off my mortgage as soon as I could. For awhile I worked for a company with a quarterly bonus, and I threw that at the mortgage as extra payments. Some years later I got laid off in the dot com collapse and found myself unemployable as an older woman in a technical field, and so "retired."

Now the big chunk of housing expenses is the high property tax in this area. I pause for a moment and think fondly of Prop. 13 in California.
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OAG
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Re: Early retirees - did you pay off your house?

Post by OAG »

Semi-retired at 38. Kept a 8% mortgage for 7 more years then sold, relocated (twice: FL (19 Yrs), now OH (8 Yrs & counting). Have not had a mortgage for the past 27 Yrs, but have owned 5 different homes in that time: now only current one left. Definitely easier to live life financially without a mortgage IMO.
Last edited by OAG on Thu Sep 12, 2013 1:38 pm, edited 1 time in total.
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Sidney
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Re: Early retirees - did you pay off your house?

Post by Sidney »

Professor Emeritus wrote:The benefit of owning your own house in retirement depends heavily on cash flow and liquidity issues. If your house is more than 25-30 percent of your total "wealth" or "income" (reducing all assets or income streams to the same measure ) you are probably "over housed" or "house poor" on most measures. But as with anything it is a matter of personal choice
Our house is about 20% of our "total wealth" . So it works nicely
Yes. We started out with a maximum of 25% when we first bought and over time I ratcheted the limit down to 10%. Eventually I may even go to zero. Owning a home can be a real pain.
I always wanted to be a procrastinator.
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