Retiring at 39 from the military, should I invest or pay off mortgage?

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oleblue
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Retiring at 39 from the military, should I invest or pay off mortgage?

Post by oleblue » Fri Feb 14, 2020 2:38 pm

I'm approaching a new chapter in my life and am requesting a sanity check. I just spent a few hours reading on the topic of paying off your house vs investing.

I'm 37 years old and 2 years out from retiring from the military (I will do self employment paid work after this)
Single No kids
No debt except 15 year $200K mortgage/rental at 3% that I acquired last year. I put 20% down owe $150K as of now. My first house ever by the way.
I max out my TSP and Roth annually (no TSP match for me)
$500K in tax advantaged accounts Roth, TSP, SEP
$115K in taxable
I have an emergency fund
My monthly living expenses are $3500 a month including mortgage.
Rental income $700 mo
Military retirement check will be $2600 before taxes with no state tax

My side business (selling parts online) has covered my living expenses for the last 3 years and I have been blessed enough to be able to invest my entire military paycheck.

With the end of my mil career approaching I'm debating on making a few money moves and would love to hear your thoughts on it.

I have $6K a month for the next two years to invest. After maxing out my TSP and Roth that leaves $4000 left over.

In an effort to build up my taxable account, I thought of halving my TSP contributions, this would give me $700 a month extra to put in taxable or pay down the mortgage making a total of $4700. What do you guys think?

With the $4,000 or $4700 depending on what I do with TSP, should I put that in taxable or pay down the mortgage with it?

I come from the old school way of thinking when it comes to debt and that is don't be in it. I love the idea of retiring from the military with no mortgage and completely debt free. I feel like this would be huge win psychologically. However, having money in a semi-liquid taxable account is a good thing too.

Not having the mortgage would free up extra cash flow and I could live off just the military retirement check if I needed to.

My goal is to work for myself after I retire, still doing my online business, buying and selling trucks and boats on the side and whatever else I might find interesting.

I bought the house last year in Arkansas where I plan to stay after I retire from service. I stumbled upon the place, it has 6 acres, a 3br house that was being rented for the last 13 years by a good tenant and a shop house/barndominium on the back side of the property where I live. The day I moved in I received a $700 rent check and have every month thus far. I didn't intend to be a landlord it just worked out that way. With the mortgage interest basically non-existent I realize the rental portion of it can still be sort of a tax shelter. I pay $375 extra toward the principal now in an effort to pay it off sooner.

So with all of that said, should I put the extra money in taxable or pay off the mortgage?

Do I invest for now and pull money out of my taxable account before I retire and pay off the mortgage?
Last edited by oleblue on Fri Feb 14, 2020 3:11 pm, edited 1 time in total.

Grt2bOutdoors
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by Grt2bOutdoors » Fri Feb 14, 2020 2:51 pm

oleblue wrote:
Fri Feb 14, 2020 2:38 pm
I'm approaching a new chapter in my life and am requesting a sanity check. I just spent a few hours reading on the topic of paying off your house vs investing.

I'm 37 years old and 2 years out from retiring from the military (I will do self employment paid work after this)
Single No kids
No debt except 15 year $200K mortgage/rental at 3% that I acquired last year. I put 20% down owe $150K as of now. My first house ever by the way.
I max out my TSP and Roth annually
$500K in tax advantaged accounts Roth, TSP, SEP
$115K in taxable
I have an emergency fund
My monthly living expenses are $3500 a month including mortgage.
Rental income $700 mo
Military retirement check will be $2600 before taxes with no state tax

My side business (selling parts online) has covered my living expenses for the last 3 years and I have been blessed enough to be able to invest my entire military paycheck.

With the end of my mil career approaching I'm debating on making a few money moves and would love to hear your thoughts on it.

I have $6K a month for the next two years to invest. After maxing out my TSP and Roth that leaves $4000 left over.

In an effort to build up my taxable account, I thought of halving my TSP contributions, this would give me $700 a month extra to put in taxable or pay down the mortgage making a total of $4700. What do you guys think?
That would be a mistake, especially if the TSP provides a matching contribution. It would be like taking a match and burning the money. The TSP is likely to earn much more than 3% over the next 30 years on an annual basis.
With the $4,000 or $4700 depending on what I do with TSP, should I put that in taxable or pay down the mortgage with it?
You may have an old school way of thinking and there is nothing wrong with that, but if the house is truly or partly a rental, the amount of interest paid on the mortgage is deductible on Schedule E where you list rental income offset by expenses including taxes and interest paid.
I come from the old school way of thinking when it comes to debt and that is don't be in it. I love the idea of retiring from the military with no mortgage and completely debt free. I feel like this would be huge win psychologically. However, having money in a semi-liquid taxable account is a good thing too.

Not having the mortgage would free up extra cash flow and I could live off just the military retirement check if I needed to.

My goal is to work for myself after I retire, still doing my online business, buying and selling trucks and boats on the side and whatever else I might find interesting.

I bought the house last year in Arkansas where I plan to stay after I retire from service. I stumbled upon the place, it has 6 acres, a 3br house that was being rented for the last 13 years by a good tenant and a shop house/barndominium on the back side of the property where I live. The day I moved in I received a $700 rent check and have every month thus far. I didn't intend to be a landlord it just worked out that way. With the mortgage interest basically non-existent I realize the rental portion of it can still be sort of a tax shelter. I pay $375 extra toward the principal now in an effort to pay it off sooner.
Instead of paying it off sooner, you should bank that money for your next investment in real estate or if things get rough you will have that pile of money to tide you over for a while. The lender of course is estatic to get your money back sooner so it can lend it out for more profitable loans. I'd give your different advice if you had told me the loan amount was 6%, but its not.
So with all of that said, should I put the extra money in taxable or pay off the mortgage?
You should continue to max out the TSP and invest any additional monies in a taxable account. When you have enough saved up that you could take out the mortgage at ANY time, then you can make the decision what you want to do with the money. Just my 2 cents.
Do I invest for now and pull money out of my taxable account before I retire and pay off the mortgage?

Thank you for your service!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Watty
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by Watty » Fri Feb 14, 2020 3:00 pm

I am normally in the "pay off the mortage" cheerleading camp but in your case I think that it would be best to just invest the money, especially in retirement accounts, and then wait until you have been out of the military for a few years to decide of you want to pay it off early or not.

That would give you a lot more flexibility if your situation changes.

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btq96r
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by btq96r » Fri Feb 14, 2020 3:12 pm

I'm in the pay off mortgage camp, or at least pay down some principal. While it's a good thing that your self-employment side gig is healthy, I always like to err on the side of greater cash flow in situation's like yours where a big change is coming. Paying off the mortgage will just help you keep options open; your current retirement account value is in great shape to facilitate this as you have 20+ years of growth on an already good amount. That said, you can certainly afford to wait for a bit, maybe see if you want to move to a different area.

Also, congrats on the solid fiscal footing. You're one out of ten thousand that comes out of the military in this kind of a state financially. I know this because over a decade ago, I was among the other 9,999 when I got out after almost nine years in. :D
Moderation is for Canadians.

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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by Wiggums » Fri Feb 14, 2020 3:34 pm

Watty wrote:
Fri Feb 14, 2020 3:00 pm
I am normally in the "pay off the mortage" cheerleading camp but in your case I think that it would be best to just invest the money, especially in retirement accounts, and then wait until you have been out of the military for a few years to decide of you want to pay it off early or not.

That would give you a lot more flexibility if your situation changes.
I agree.

book lover
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by book lover » Fri Feb 14, 2020 4:13 pm

You may want to check out this excellent book on Amazon entitled: The Military Guide to Financial Independence and Retirement by Doug Nordman.

renegade06
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by renegade06 » Fri Feb 14, 2020 7:00 pm

Great job, brother! You’ve done really, really well.

RogerWilco
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by RogerWilco » Fri Feb 14, 2020 9:35 pm

AD here with 13 months remaining and similar situation

For us we believe it will be best to max out TSP and Roth then pay down the mortgage to have none by the time mil retirement comes. This allows positive income for the $$$$ not going to a mortgage that no longer exists.

The argument was even stronger for us since there was no tax incentive to keep the mortgage and I did not want to leverage a mortgage to put more $$$ in the market.

You appear to have done well - great work!

V/r

FI4LIFE
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by FI4LIFE » Fri Feb 14, 2020 11:43 pm

I am impressed with your ability to enact a plan that involves creating a profitable small business. You have put yourself in a great position.

As much as paying down the mortgage feels safe, I think you will be in a better position if you put the money aside in a taxable account, conservatively invested. Once that account total is equal to the mortgage balance, it will be a better time than it is right now to make the decision (payoff vs. don't pay off mortgage).

At that time you will have a better picture of how your online business is doing, how well your tenants are keeping up on the rent etc. There is no rush to decide right now. Putting it away in a taxable leaves your options wide open as long as you choose safe investments. Not to mention, a larger cash cushion may come in handy if you decide to continue growing your business and need capital for inventory or if business slows. It's nice to have options.

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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by JoeRetire » Sat Feb 15, 2020 6:46 am

oleblue wrote:
Fri Feb 14, 2020 2:38 pm
So with all of that said, should I put the extra money in taxable or pay off the mortgage?

Do I invest for now and pull money out of my taxable account before I retire and pay off the mortgage?
Invest. Don't pay off a 3% mortgage.
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Topic Author
oleblue
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by oleblue » Sat Feb 15, 2020 7:33 am

Thanks for all the replies. I don't plan on moving anytime soon. Another option is to do another year in service, I don't have to go at 20 but I would realy like to. I could put away another years worth of investments and add another 2.5% to my retirement which would equate to about right at $2K a year extra.
I would really like to have the house paid off before I get out just to have that cash flow back but I understand the importance of having the liquid funds.

It is getting later in the day here and my mind is slowing down but what am I missing or forgetting to take into account here? To me the math in the long run looks better to pay 4K a month on the mortgage not taking into account the emotional portion of having the house almost paid for.

Calculations based off 6% gain in taxable.
If I save $4K a month for the next 2 years in taxable I'll have a rough estimate of $230K at 6% in taxable depending if the market tanks or not.

If I keep paying $375 extra on the mortgage like I am now and save $4K a month in taxable for the next 2 years, I'll have a rough estimate of $230K in taxable with a $133K mortgage balance with 8.5 more years of payment.
$230K (est. total in taxable in 2 yrs)-$133K(what's left on mortgage)= $97K left in taxable if I decided to paid off mortgage, $18K less than I have now.

If I pay $4K a month extra on the mortgage for the next 2 years, I'll have a $56K mortgage balance left and 9 more months left on the mortgage with an interest savings of $31K and a taxable balance of $129K.

If I pay $2K on mortgage and $2K in taxable for the next two years I would have a $99K mortgage balance and a $180K taxable balance leaving me with $80K in taxable if I chose to pay off the mortgage.

Grt2bOutdoors wrote:
Fri Feb 14, 2020 2:51 pm

In an effort to build up my taxable account, I thought of halving my TSP contributions, this would give me $700 a month extra to put in taxable or pay down the mortgage making a total of $4700. What do you guys think?
That would be a mistake, especially if the TSP provides a matching contribution. It would be like taking a match and burning the money. The TSP is likely to earn much more than 3% over the next 30 years on an annual basis.

I'm glad to be able to serve and thank you. No matching contributions for me.

With the $4,000 or $4700 depending on what I do with TSP, should I put that in taxable or pay down the mortgage with it?
You may have an old school way of thinking and there is nothing wrong with that, but if the house is truly or partly a rental, the amount of interest paid on the mortgage is deductible on Schedule E where you list rental income offset by expenses including taxes and interest paid.

Roger that, how would I split that up since the taxes and interest I pay are both paid collectively for my house and the rental?
book lover wrote:
Fri Feb 14, 2020 4:13 pm
You may want to check out this excellent book on Amazon entitled: The Military Guide to Financial Independence and Retirement by Doug Nordman.
Great book! I've read it twice and I've read Nord's entire blog every single post.

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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by Grt2bOutdoors » Sat Feb 15, 2020 9:53 am

oleblue wrote:
Sat Feb 15, 2020 7:33 am
Thanks for all the replies. I don't plan on moving anytime soon. Another option is to do another year in service, I don't have to go at 20 but I would realy like to. I could put away another years worth of investments and add another 2.5% to my retirement which would equate to about right at $2K a year extra.
I would really like to have the house paid off before I get out just to have that cash flow back but I understand the importance of having the liquid funds.

It is getting later in the day here and my mind is slowing down but what am I missing or forgetting to take into account here? To me the math in the long run looks better to pay 4K a month on the mortgage not taking into account the emotional portion of having the house almost paid for.

Calculations based off 6% gain in taxable.
If I save $4K a month for the next 2 years in taxable I'll have a rough estimate of $230K at 6% in taxable depending if the market tanks or not.

If I keep paying $375 extra on the mortgage like I am now and save $4K a month in taxable for the next 2 years, I'll have a rough estimate of $230K in taxable with a $133K mortgage balance with 8.5 more years of payment.
$230K (est. total in taxable in 2 yrs)-$133K(what's left on mortgage)= $97K left in taxable if I decided to paid off mortgage, $18K less than I have now.

If I pay $4K a month extra on the mortgage for the next 2 years, I'll have a $56K mortgage balance left and 9 more months left on the mortgage with an interest savings of $31K and a taxable balance of $129K.

If I pay $2K on mortgage and $2K in taxable for the next two years I would have a $99K mortgage balance and a $180K taxable balance leaving me with $80K in taxable if I chose to pay off the mortgage.

Grt2bOutdoors wrote:
Fri Feb 14, 2020 2:51 pm

In an effort to build up my taxable account, I thought of halving my TSP contributions, this would give me $700 a month extra to put in taxable or pay down the mortgage making a total of $4700. What do you guys think?
That would be a mistake, especially if the TSP provides a matching contribution. It would be like taking a match and burning the money. The TSP is likely to earn much more than 3% over the next 30 years on an annual basis.

I'm glad to be able to serve and thank you. No matching contributions for me.

With the $4,000 or $4700 depending on what I do with TSP, should I put that in taxable or pay down the mortgage with it?
You may have an old school way of thinking and there is nothing wrong with that, but if the house is truly or partly a rental, the amount of interest paid on the mortgage is deductible on Schedule E where you list rental income offset by expenses including taxes and interest paid.

Roger that, how would I split that up since the taxes and interest I pay are both paid collectively for my house and the rental?
book lover wrote:
Fri Feb 14, 2020 4:13 pm
You may want to check out this excellent book on Amazon entitled: The Military Guide to Financial Independence and Retirement by Doug Nordman.
Great book! I've read it twice and I've read Nord's entire blog every single post.
The taxes and interest are shown on Schedule E as a proportionate amount relative to the total amount of space. For example, let’s say you have rented out space equivalent to 40% of the overall property, I say 40% because you retain use and control of backyard, basement and/or driveway of main property. If interest was $10k per year, you could deduct 40% of it or $4,000. Likewise for property taxes. Since it is a rental, you should also be depreciating the real property being rented at rental property cost divided by 26.5 years. A tax program like Turbotax will have the Schedule E in it, just fill in the questions and it will do the rest. If you have time you can visit IRS.gov and preview Schedule E to see what I mean. The rental income is offset by those expenses, so your taxable income should be lower. I would take those tax savings and throw it back into the mortgage as you likely are doing without realizing - cash flow is different than tax declaration.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by Nords » Sat Feb 15, 2020 11:05 am

oleblue wrote:
Sat Feb 15, 2020 7:33 am
book lover wrote:
Fri Feb 14, 2020 4:13 pm
You may want to check out this excellent book on Amazon entitled: The Military Guide to Financial Independence and Retirement by Doug Nordman.
Great book! I've read it twice and I've read Nord's entire blog every single post.
Thanks, I’m glad the book & blog are helping!

The blog is currently 567 posts with one more scheduled for 20 February, but during the last decade it’s occasionally been over 800 posts.

Here’s some questions to consider. The answers are intensely personal and your choice may be only right for you.

I understand that you’re returning to this property after you retire. Is it as attractive today as it was 13 years ago? If you stumbled across it again today, then would you buy it again? Or would you rather have a smaller place (less maintenance/repairs) and spend more time on travel or other activities?

Do you see yourself moving again for family or climate or any other reason? Have your interests changed since you first bought it, or would you rather live in other places? Military retirement is a chance to redesign your life, and you don't want to lock in your thinking.

Since your mortgage is on a rental property (for now), how is that property performing? What’s its cap rate? Is it worth the landlord hassle? Could you be earning more (opportunity cost) if the money you’ve put into your rental property was invested in the stock market? What’s your exit strategy, and have you accounted for depreciation recapture tax as well as capital gains taxes (and other federal/state/local taxes)?

Or would you rather just move back into it after you retire and deal with the tax situation later in life?

To answer your mortgage question, it’s a perpetual debate. You have three options.
1. Pay off the mortgage because it makes you happier and you sleep better at night. The emotions of behavioral finance will trump logic and math every time. It doesn't matter what risks you'd take or what investment returns you might achieve-- you don't want to take any risk at all.

2. Keep the mortgage and invest in things which pay more total return than the mortgage.

Your monthly mortgage payment can be offset by your monthly military pension. Your 15-year mortgage principal/interest payments will remain flat while your military pension will rise with inflation. (Even a 1.5% COLA/year over 15 years is a boost of 25%.) You’ll minimize investing in bonds or CDs which yield less than 3% and you’ll focus on asset classes with higher long-term returns... like total stock market index funds.

In other words, you’re borrowing against your future military pension payments by putting your house up as collateral while you (hope to) receive the stock market’s long-term total return.

3. Compromise by doing a little of each. Split the excess cash evenly between investing and paying down the mortgage.

I’m in the camp of “keep the mortgage and invest”. Over the last 17 years my military pension has risen over 40% (despite several years of zero COLAs) while our mortgage payments have shrunk with every refinance.

My spouse and I have done this mortgage arbitrage for nearly 20 years. We’ve tracked our numbers since late 2004 with an 8% after-tax annual return (although it’s quite volatile) on 30-year mortgages dropping from 5.375% to 3.50%. During 2008-09 the compounded annual return dropped to -2%/year, although it was back above the mortgage rate a few years later.
We’re currently paying 3.5% on a 30-year loan that will be paid off by my 87th birthday in 2047. We’d happily refinance if we can get a VA streamline loan (or just about any other 30-year fixed mortgage) at 3% or less. Over the rest of the mortgage that 8% annual return will probably drop closer to 6% on a 3.5% loan. On a $600K mortgage that 2.5%/year difference works out to $15K/year, which is a meaningful sum on annual spending of $60K-$100K/year.

But again that logic & math only matters if you're choosing options 2 or 3. It's irrelevant if you're firmly in option 1.
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Topic Author
oleblue
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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by oleblue » Sun Feb 16, 2020 2:42 am

Nords wrote:
Sat Feb 15, 2020 11:05 am
oleblue wrote:
Sat Feb 15, 2020 7:33 am
book lover wrote:
Fri Feb 14, 2020 4:13 pm
You may want to check out this excellent book on Amazon entitled: The Military Guide to Financial Independence and Retirement by Doug Nordman.
Great book! I've read it twice and I've read Nord's entire blog every single post.
Thanks, I’m glad the book & blog are helping!

The blog is currently 567 posts with one more scheduled for 20 February, but during the last decade it’s occasionally been over 800 posts.
I'll be sure to check it out!

Here’s some questions to consider. The answers are intensely personal and your choice may be only right for you.

I understand that you’re returning to this property after you retire. Is it as attractive today as it was 13 years ago? If you stumbled across it again today, then would you buy it again? Or would you rather have a smaller place (less maintenance/repairs) and spend more time on travel or other activities?

Do you see yourself moving again for family or climate or any other reason? Have your interests changed since you first bought it, or would you rather live in other places? Military retirement is a chance to redesign your life, and you don't want to lock in your thinking.

Since your mortgage is on a rental property (for now), how is that property performing? What’s its cap rate? Is it worth the landlord hassle? Could you be earning more (opportunity cost) if the money you’ve put into your rental property was invested in the stock market? What’s your exit strategy, and have you accounted for depreciation recapture tax as well as capital gains taxes (and other federal/state/local taxes)?

Or would you rather just move back into it after you retire and deal with the tax situation later in life?

Doug, I'm sorry for any misunderstanding, maybe I didn't word my question right. I just closed on the house and rental last June and I have lived in the house since then. I love the place, it fits me perfect, and I don't plan on moving in the foreseeable future and I plan to continue to live there after I retire from the mil. I have a 40x65 workshop area that's my favorite part. I'm stationed in AR now and the base where I work is about 6 miles from my new home. I think I'll be able to stay in AR until I retire or at least I'm hoping. I bought the place as two houses on one piece of property,property, rent house and the shop house I live in all for $215K, the one house is being rented out and the other one I live in. Hopefully that makes sense.

The rental brings in $700 a month, mortgage is $1325 (keep in mind for both my house and the rental, it would bring $850 easily but the lady has been living in there for 13 years, she's 62 years old on fixed income and I didn't want to jack up the rent as soon as I became the landlord. It's been fairly painless so far being a landlord, she takes really good care of the place.


To answer your mortgage question, it’s a perpetual debate. You have three options.
1. Pay off the mortgage because it makes you happier and you sleep better at night. The emotions of behavioral finance will trump logic and math every time. It doesn't matter what risks you'd take or what investment returns you might achieve-- you don't want to take any risk at all.

2. Keep the mortgage and invest in things which pay more total return than the mortgage.

Your monthly mortgage payment can be offset by your monthly military pension. Your 15-year mortgage principal/interest payments will remain flat while your military pension will rise with inflation. (Even a 1.5% COLA/year over 15 years is a boost of 25%.) You’ll minimize investing in bonds or CDs which yield less than 3% and you’ll focus on asset classes with higher long-term returns... like total stock market index funds.

In other words, you’re borrowing against your future military pension payments by putting your house up as collateral while you (hope to) receive the stock market’s long-term total return.

3. Compromise by doing a little of each. Split the excess cash evenly between investing and paying down the mortgage.

I’m in the camp of “keep the mortgage and invest”. Over the last 17 years my military pension has risen over 40% (despite several years of zero COLAs) while our mortgage payments have shrunk with every refinance.

My spouse and I have done this mortgage arbitrage for nearly 20 years. We’ve tracked our numbers since late 2004 with an 8% after-tax annual return (although it’s quite volatile) on 30-year mortgages dropping from 5.375% to 3.50%. During 2008-09 the compounded annual return dropped to -2%/year, although it was back above the mortgage rate a few years later.
We’re currently paying 3.5% on a 30-year loan that will be paid off by my 87th birthday in 2047. We’d happily refinance if we can get a VA streamline loan (or just about any other 30-year fixed mortgage) at 3% or less. Over the rest of the mortgage that 8% annual return will probably drop closer to 6% on a 3.5% loan. On a $600K mortgage that 2.5%/year difference works out to $15K/year, which is a meaningful sum on annual spending of $60K-$100K/year.

But again that logic & math only matters if you're choosing options 2 or 3. It's irrelevant if you're firmly in option 1.
I definitely want to pay the house off and not hold the note for 15 more years. I could do a few more years 22 total in the military maintaining my current savings rate and leave out with the house paid for and close to $1M in investments. The service has not been bad for me at all I have no complaints but I just don't enjoy it as much as I used to hence the reason for going at 20. I could definitely do 2 more years and be ok if that's what makes the most sense, or go as long as I can here in AR till they try to move me and then drop retirement papers.

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Re: Retiring at 39 from the military, should I invest or pay off mortgage?

Post by macheta » Sun Feb 16, 2020 4:45 am

FI4LIFE wrote:
Fri Feb 14, 2020 11:43 pm
I am impressed with your ability to enact a plan that involves creating a profitable small business. You have put yourself in a great position.

As much as paying down the mortgage feels safe, I think you will be in a better position if you put the money aside in a taxable account, conservatively invested. Once that account total is equal to the mortgage balance, it will be a better time than it is right now to make the decision (payoff vs. don't pay off mortgage).

At that time you will have a better picture of how your online business is doing, how well your tenants are keeping up on the rent etc. There is no rush to decide right now. Putting it away in a taxable leaves your options wide open as long as you choose safe investments. Not to mention, a larger cash cushion may come in handy if you decide to continue growing your business and need capital for inventory or if business slows. It's nice to have options.
Regarding this post, this is the path I am taking right now myself since I decided to save in a low risk investment instead of my mortgage. I'll pay off the house once this fund equals my home loan amount. This mentally feels better than paying off the mortgage especially since I have a lot of concerns about being laid off in the next six months to a year.

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