vitaflo wrote: willthrill81 wrote:
mortfree wrote:I paid off my mortgage in 2016 (I had 94k remaining in 2013). House value 230k
I maxed my 401k in 2016 and will again in 2017.
Maxed my Roth in 2015, 2016, and 2017.
I contributed to my wife's Roth in 2016. 2017 is TBD.
I've also been investing in my taxable - VTI and Berkshire Hathaway.
Freedom of not having a mortgage gives me comfort to throw $$ in the market. Age 40 btw.
That's precisely my plan well. Once our mortgage is paid off in three years, we'll double up on our monthly investments. That will enable us to max out my 401k, both my spouses and my IRA, my HSA (already maxed), and still have some left for taxable accounts.
This implies you're not currently maxing out your tax-advantaged accounts when you could be? I'm curious why you're not maxing them out before you pay down your mortgage? It feels like you're giving a lot of extra money to Uncle Sam every year.
There are several factors at work here. First and foremost, while my job (and career) is very secure in the short-term, I have some serious concerns about its long-term security. I don't want to lose my job (and my career) and still have a mortgage, even if my 401k would look great for my age but be inadequate to allow a very early retirement.
Second, I am already taking on quite a lot of risk by being virtually 100% in stocks with my portfolio, which is significant for my age already. By paying down/off my mortgage early, I'm reducing my total risk.
Third, once our mortgage is paid off, around 90% of my monthly investments will be going into tax advantaged accounts anyway, so I'm not losing much tax-advantaged 'space' by paying off the mortgage early.
I know that mathematically, if everything goes fine, this is a sub-optimal strategy, but the expected cost is minimal. Plus, my DW really wants to do it this way, and I've been married long enough to believe in the maxim "Happy wife, happy life."
runner540 wrote:For folks with enough income to max, why not max out retirement accounts and build the rest of the budget, including mortgage around it? Hard to beat the tax benefits. It's all different flavors of LBYM and building wealth.
As noted above, I'm not losing much tax-advantaged space by doing it this way. Plus, I want to go into retirement (hopefully age 55) with some assets in taxable accounts for various reasons.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings