DON'T RETIRE Until You Have These 5 Things Paid Off!
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- čas přidán 2. 07. 2022
- Some of the best things to own in retirement are those that are hiding in plain sight. Some are 'optional,' some are mandatory, but each of these five retirement expense items are important to be paid off BEFORE you go into retirement - if you are going to pay for them eventually.
"DON'T RETIRE Until You Have These 5 Things Paid Off" is a video about major retirement costs that can catch you off guard if you are not planning ahead. This video will help you navigate the complex world of who pays for what in retirement.
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My paid off mortgage may not make great financial sense, but it sure helps me sleep well at night.
A small mortgage is a cheap line of credit - it is the cheapest interest rate you are likely to get - if you fully pay off your mortgage you may struggle to raise finance again if the need arises
The pandemic has shown us just how quickly decades of planning, investing and saving can be completely upended. This could mean your current financial plan might leave you without enough money to last your retirement. A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less.
In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio
I agree; for over 17 months, I've maintained regular contact with an investment advisor. Nowadays, it's really simple to invest in trending stocks, but the challenge is knowing when to sell or hold. To support me with entry and departure points, my advisor steps in. Within 18 months, I've accrued almost a million dollars from an originally stagnating reserve of $300K.
@@AntonioBianh I'm happy to have stumbled upon this discussion. If you don't mind, could you tell me the name of the financial adviser who helps you with your investments and how I might contact them? It Intrigues me to keep learning
Having a counselor is essential for portfolio diversification. My advisor is Margaret Johnson Arndt who is easily searchable and has extensive knowledge of the financial markets.
thank you for this tip , I must say, she appears to be quite knowledgeable. After coming across her online page, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
I went debt free at age 55, I am now 70. What a wonderful life I have led since deciding to buckle down and stay debt free. I cannot stress enough how liberating it is.
I so wish I had done this earlier. My wife and I are chasing this now and I'm 58... Luckily I have a very nice job now.
*Me too debt free at 44yr old now 53 own 4 large homes and shares never using debt again, feels great* 🤣
I accidentally stumbled on some amortization software in 1997. When I realized the real cost of debt, I was completely debt free by 2008, and fully funding all my retirement savings opportunities including Roth IRAs and 401Ks. Now we are living in a brand new luxury home with a new car (and one 3 yo car) all paid for in cash. We need 55-70k a year to live, and most of that is covered by my pension. All those investments are just compounding... and we couldn't be happier!
When the pain of debt has really weighted heavy on you. Meaning like a good butt whipping. You never go in debt again. Wish at 21 I had this mind set😇
I am working towards that
I'm surrounded by brand new financed cars in my neighborhood. I drive a 2011 truck. The paint is coming off the hood. But, I have no debit. I drive my truck with pride.
I too see this phenomenon in my middle class neighborhood. I think its common everywhere in the US. The HERD mentality of keeping up or surpassing your neighbors is an epidemic. So many people in debt. Material things do not bring happiness. I think it was one of the Waltons (of Walmart) that drove a 30 year old pick up truck. Live within your means!
@@skimanfree1073 Great comment , it was Sam Walton The founder of Walmart.
I drive a 21 year-old car. My neighborhood is full of $70k SUVs
I drive a 2007. Obviously, no car payment there. I also keep track of repairs and on an annual basis it costs me about $140 per month to keep it on the road. ‘Cheaper to keep her,’ couple that with not caring what other people think it works out pretty good financially. I salute you.
I salute you bubba!! Your bank account is better for it. Who cares what others think. You can sleep at night, while they get their giant payments rolling in.
I think home improvements/renovations/repairs should be planned and paid for before retirement. These things can be very costly and seem to only go up in cost as time passes.
I agree. We have two HVAC systems and both died within a few months of each other. Since they’ll need to be replaced about every 10-15 years or so, that means you;re going to be hit with a potential cost of $8-12k during your retirement. Houses are expensive! Don’t buy a charming, small house to retire in unless it has just been completely PROFESSIONALLY renovated.
1) Credit Cards
2) Personal Student Loans
3) Others Student Loans
4) Weddings
5) Bucket List Vacation
Thanks!
Thank you.
YAY YOU!
Car purchases. I have friends that have 3 car loans. Insane.
thanks for saving me a sudden death due to boredom and stupidity!
I am a firm believer in not taking on debt. So when I retired I had zero debt. That made retired life essentially free of financial stress. I have been retired for 22 years and am very glad that I didn't have to deal with debt while retired. I live a frugal life. That doesn't mean that I don't enjoy life.
yawn. you suck at math. I have 1.5 million dollars in debt, on 11 million dollars worth of homes. I make $40,000 a month, enjoy your paid off crappy home and social security! I'm off to asia for several months, then europe.
I think I enjoy not having to pay much attention to my grocery bill as much as some people enjoy touting the Louvre.
What about your car, how old is it? Did you pay cash for a new/used one?
@@monsterpig3270 Bought a new Subaru in 2015 and a new Ram 1500 4x4 in 2019. Paid cash for both. The Subaru now has 20,000 miles and the Ram 18,000. Both will outlive me.
I retired 6 years ago and my wife retired 2 years later debt free. So far we are having no problem living on our Social Security. When I retired we purchased a new Pickup Truck and a Travel trailer. Paid cash for both. Two years later we purchased a bigger Travel Trailer. Paid cash for that one too. In my life I never paid rent for a place to live. Purchased our first house when I was 20. Purchased our second house in 1982. My biggest asset is my wife. She started working at the local bank as a Co-op student in High School. She's an excellent money manager. We like to say "she's finance and I'm transportation. It works for us.
Yessir, but good luck finding a woman like that anymore. Most are depreciating liabilities that you have to walk on eggshells around since they will annihilate you financially when they become unhappy.
@@jmask30 We will celebrate 50 years together this fall (48 married). I can't speak to "finding a woman like that anymore". I would be crazy to be looking.
My husband retired a year ago. So my employer keeps asking me, when are you planning to retire. My response is, as soon as my husband truck is paid for. Vehicle payment is just as much as my house payment was. It actually cost just as much my house cost. Personally I can pay it off, but with the interest rate a 2% I'll keep making the car payments.
I owe nothing on any of the items you mentioned. Paid in full, and proud of it.
My wife and I did very well in the amount of money that we amassed for retirement. Well over 80% of that money was made because of taking advantage of buying high-end stocks at a deep discount during the Great Recession. 2009 I fired the stockbroker got rid of all mutual funds and bought individual dividend stocks. Be patient don't get scared and do your homework and you can make a killing.
I'm 54 and my wife and I are very worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, we are finding it impossible to replace it. We can get by, but cant seem to get ahead. My condolences to anyone retiring in this crisis, all those years of work just to loose it all to a crisis you didn't cause.
@@MIchaelGuzman737 I feel your pain mate, as a fellow retiree I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor "Theresa Mary Chamblee'', this year for assistance, and following her advice, I poured $150k in passive diversified safe-haven assets and its yielded $325k so far. Nothing special, just proper diversification and a cut loss and take profit strategy.
I think it's especially difficult for retirees and near retirees, I know to focus on the long term but the anxiety when you're supposed to be retiring in 3-5 years is exhausting. it's hard for me to take part in the market right now due to the fulltime nature of my job. it will be way to stressful to combine so i don't even think about it
I think people who suffer are the ones who don't think about their future and don't invest. Investing has really saved many lives and got people off the streets. everyone needs more than there basic salary to be financially secured. the best thing to do with your money is to invest. Money left in savings always end up used with no returns.
Every single bear (U.S.) market eventually recovered and hit new ATHs, and every stock investor wished they bought more during the sell-off. Buffett bought $600 million more $AAPL during a 3 day sell-off in Q1 2022. The wealthy get this and it's 1 reason they keep getting richer
Coming up to my 62nd trip around the sun. My wife and I will be debt free. No credit card debt, no mortgages, no personal lines of credit, no auto loans. Not collecting any pension money yet, and still working part time, more because we both enjoy our careers and the social time our active career gives us, than just the need for cash. I feel being free of debt allows us choices to work if we choose and on our terms, that still being in debt would not allow. We planned long ago to be in the position we are today. And planning is more important than just dreaming.
I started listening to Dave Ramsay 15-20 years ago. Never ardently followed the baby steps, but over time, adopted the principles of living within my means, getting out of debt and staying that way. I retired at 66, four years ago. I’m 100% debt free (including mortgage) I owe Dave Ramsay my gratitude for convincing me that deferred gratification would pay-off in complete financial security now.
Ramsay is a condascending POS.
Same here
Curious if you follow his advice to withdraw 8% from your retirement account each year. For those retiring in early 2000’s, they were broke by the end of the decade. Great advice.
@@JoeTaxpayer Nope. As I wrote, Dave Ramsey simply inspired me to alter my lifestyle. I still have an 825 credit score, use a cash back credit card for almost all purchases. Never carry a balance on it. As far as withdrawing from my retirement accounts, I won’t do so until I am forced to take RMDs. I live comfortably off of other income streams.
@Ari GSD Ramesy's advice is for households with incomes under $80k. Once you are in the 24% tax bracket (and 6% state income tax), his advice will have you paying more taxes while not maximizing expected returns using leverage.
I'll write off my 2% mortgage interest at the earned income rate while maxing out my IRA at an 8% expected long-run return and deferring tax on that, while paying the 15% capital gains rate on occasion all day long vs. Dave's plan of killing off my mortgage interest deduction and tying up more of my money in my house.
We retired debt-free five years ago and have stayed that way and never been happier.
Wedding costs….the largest waste of money. More then half end in divorce.
I had been a preacher all my life since I was 24. One cardinal rule: preachers need to live by their means and never owe anyone money if at all possible. So, besides the home loan mortgage payments, we lived debt-free life all the years.
I guess Im a skin flint as I gave my daughter $4500 for wedding the rest she would have to finance. This encouraged her to focus on the real reason for the ceremony than making it a spectacle. She had a very nice venue, ceremony and reception with a meal for guests all for that cost. It was very nice.
I retired 2 years ago at age 72 and was able to pay off all debts including mortgage and buy new cars for both my wife and put a new high quality roof on my house before retiring. There is no predicting what will happen 10 or 20 years from now but starting with no debt has made for a better retirement experience.
Something funny, odd...I've lived in many areas, climates, in my life. When I moved to Phoenix I bought a fixer house as I always do. It had a fair amount of water damage. One place from rain and another from a leak in a rooftop AC unit (the condense line). Coming from wet areas I thought I'd have to fix these ASAP, Well it turned out ASAP wasn't needed. It's so dry here, rains so rarely, that the damage is so slow I could've gone decades without major problems. It's very weird here. A surprising number of benefits to a hot dry climate.
I see a lot of roofs here in really bad shape, but that's not a huge problem when It rains once a year for an hour or so.
@@MrWaterbugdesign how's the drinking water situation?
I retired a few years ago and am loving it! Great content!
09:28 THANK YOU so much for covering this. If a financial advisor is willing to put their name out in that manner who knows what kind of shady stuff they will do with your money!
Thank you for mentioning the “referrals” in the comments.
One thing you missed... auto loans! I retired in Aug. of 2020 due to the lock downs killing jobs. My house was paid off in 2017 and once I realized I had to retire in Aug. of 2020 I still had $12,000 in auto loan debt. Fortunately I had refinanced the loan though my bank at half the old interest rate. Still I didn't want that bill hanging over me so I used savings to pay it off at the end of July meaning I retired debt free. I have 3 credit cards, use 2 and they are paid off before the end of the month. All that stimulus money was saved and that paid my auto loan off.
My advice, as a 56 year old who has been working full time since 1988, is to have ALL DEBT paid for before you retire. You should aim to have *zero* debt upon retirement. I'm not talking about a credit card that you use for everyday purchases and pay off every month. ALL of your consumer debt (mortgage, auto loans, everything) should be fully paid for before you retire. That's my plan, and I'm actually already there even though I plan to work eight or nine more years.
It's also a good idea to have your major household repairs done or set money aside in a savings account to do them when they come up, things such as a new roof, a new furnace, etc. And to have some of your retirement funds invested in things besides the stock market. Rental property, etc. Most people go into retirement vastly underfunded and ill prepared.
Also, if your company offers that stock pile money in your HSA. You’re gonna need these to help with out-of-pocket expenses once you start using Medicare.
@@jmask30 And get a Medicare supplement.
I'm in the same boat as you. I just turned 50 and I've been debt free for over a decade now. I totally agree with what you have to say
Debt free since age 52. I am now 59. No kids. House, vacation house, 3 cars and tractor all paid for. One CC paid off and one Gas Card paid off every month. Got 2 part time retirement jobs to keep me active. Trying not to dip into our retirement funds with the 2 part time jobs. Life is easier with no house payments!!!!
I’m retiring at 55 from the job. Will work on my side hustles after that.
Happy to say that I have no debt and retired!
One item you might have covered was planning for health care in retirement. As a baby boomer I learned to live within my means, worked my way though college earning a degree in computer science with out taking out a loan, something which is very difficult now days. Built multiple streams of income including rental real estate. Becoming more self reliant in home and auto repairs,, and growing my own food.. I did these things before retirement at 65 had Medicare kick in, paid off my home at 55, rental restate paid off at 60, kept three streams of income going into retirement.
WHO CARES? (except YOU) LOL
And yet our school superintendent makes 270 grand a year and will pull a quarter mil a year pension for the rest of his life. Wise up people if they didn't have their own separate retirement fund we wouldnt be hearing this nonsense about social security running out
great call out. I am dealing with two elderly woman. Mom and Mother in law. We are their health care outside of Medicare. It shows me the one place I need to work on.
I agree. You need pensions, qualifying dividend distributions, rental income and of course 401k.
No mention of property taxes or perhaps I missed it? Those are the one tax that follows you into retirement and often eats a big chunk of money as your property's value increases. I think living in a state with fixed or nearly fixed property tax matters, so the taxes do not force you into debt to cover the home that you paid off.
When you turn 65 they froze your taxes and the state depending on where you can not raise your taxes. So you pay the same amount you paid before retirement. So if you put it in your monthly budget and it is not a problem.
Property tax is Lien on your home for life. Add a HOA and gramma and Grampa are screwed
@@memelc5655Then you obviously need to plan for that.
A lot of grandparents are now caring for their grandchildren, which was/is an unexpected responsibility at their age…
House paid off was an absolute must.
One thing I want to add regarding the comment around financial planners. Never, never, never use a financial planner or investment advisor who is not registered with FINRA and any applicable state regulatory authority. Regulated advisors have to meet certain minimal requirements and you can review their regulatory record, including any formally filed complaints or red flags. You can confirm this online with FINRA. In addition, you should consider using an advisor with other professional designations, such as CFP and CPA, and you should confirm those designations are in fact held by the advisor. I say all this as an attorney and former financial regulator.
And make sure they are a fiduciary!
@@srconrad If they're registered with FINRA, they are.
I have Fidelity handle my IRA now. It isn't free, by any means, but I don't worry about someone Madoff my money. Fidelity is one of the three low-cost brokerages (Schwab and Vanguard are the others).
For me, I wanted to have all my home renovations done before I retire. Although I paid for this as I went, there may be some out there who used a home equity loan for this purpose. I would want this type of debt paid off before I retire
I retired 20 years ago at 45. I kind of do the opposite. I buy a home that needs work (more the better) in an OK area that I think might improve or at least isn't declining. I live in the house for a few years and then start slowly making improvement. It's one of my hobbies. I get most materials cheap off CraigsList or free on bulk trash pick. Here in Phoenix we have bulk trash pick up 4 times a year. Wow the things people toss. A couple months ago I got a bunch of 2x4s, 2x6's curbside while a 2x4x8 was selling for about $10. The wood was straight, no rot (Phoenix) and was stained. The kicker is this turned out to be premium grade (sticker were still on some) and wow what a joy that was to cut and work with.
Anyways, I remodel and sell, repeat every 5-7 years. It's how I've funded my retirement. The $250k cap gain income tax exclusion means my reportable income has been under the requirement to even file a 1040 (April 15 means nothing to me). That trigger me getting Medicaid so free healthcare, a free smartphone and plan (LifeLine) and now free 100mbs in home internet. After turning 65 I lost Medicaid but that converted to Medicare Part B being paid for and $0 copay, $0 deductible. It isn't so much the cost savings these things provide, it's the reduced stress. Before Medicaid I had to research a bunch of insurance plans I never understood and that had to be done every year. And I had the feeling I'd be dropped or cost would increase if I had any kind of long term issue so really I was paying a lot and wasn't really covered long term. Medicaid changed that. I no longer had to research plans. When I had an issue I didn't have to guess about costs or worry. Same with a smartphone. I use whatever phone they send me. So simple. No having to deal with tracking a monthly payment.
So for me owning a house and doing upgrades myself has been a big part of my retirement.
Most definitely in case your bank or credit union call in the loan.
I have been debt free for 30 years, and retired for 15 years. Works for me.
Excellent points!
Well said as always!
Oh, and also before you retire, have at least one year's worth of cash saved up.
To me at least 3 years in cash and the rest in safe investment.
My plan at age 39
1. No debt - Complete
2. Pay off house - Complete spring 2024
3. Maximize Roth IRA, 401k, HSA - Half way there
4. Learn skills/certs that keep you in demand.
5. Live and Give
I listen to Dave Ramsey and the money guys show.
You'll be good to go my friend! Congrats!
Good advice, thank you.
Thank you for this
one good way to retire is to never get married, don't have kids, don't buy new cars , buy products from thrift stores, good wills, garage sales, buy used from eBay. keep your mortgage under 1000 dollars and all utilities , food cost, gas, car insurance under 1000. that way your only paying under 2000 in bills. do not get any credit cards from any company what so ever. Pay cash for everything. Refridgerator breaks. go on market place or craigslist and get another one under 1000 dollars. Smart shop. no debt. and you will be a lot more happier. only casually date that way if she gets on your nerves you don't have to worry about losing your house or car when she initiates a divorce.
Anyone watching this channel that has to be reminded not to carry credit card balances should surely remain a subscriber! Pick one credit card that gives good perks, like cash back or points of some sort that you will actually use, without an annual fee.. Use it for as many of your expenses and spending that you can, then pay the balance off every month...simple.
Or skip the whole stinking program.
I wont play that game.
Very good advice.
You rock it! Thank you so much. I love your channel!
Everyone thinks of retirement as living on a beach with a drink in your hand everyday. That gets old really quick. You'll be fat, broke and bored out of your mind if you retire too early. Get as debt free as possible but don't strive to be unemployed. Being debt free gives you the freedom to pursue your passions in life. That's where the joy and a life worth living begins...
Joe, I thought the same but I retired at 55 , went abroad to live from one country to another. It was exciting.
Thanks for your videos. I appreciate them.
I agree with your list, however, I added two to my list before I retired this year. First I payed off my car loan. I own all three of my cars. More importantly, my wife and I each purchased a long term care insurance policy that is also a life insurance policy. Thanks for your sensible videos.
Would you mind sharing the company from whom you bought the policy? Thank you.
@@conniekershaw4412 Formerly Minnesota Life Insurance Company, it is now known as Securian Financial.
My rule was have no debts except for a house loan at time of retirement and thereafter. It worked for me.
I would add get ready for any major near future expenses before retiring.
For example a new roof, major appliances , car, etc
Retired at 59 totally debt free, including having a paid off home and car.
One thing to add to this list, a paid for car.
Haven't had a car payment in over 15 years. So when gas goes up by $2/gallon, I don't sweat, unlike my buddy with a $450 monthly payment (not including maintenance and gas).
Wedding costs £325 registration fee in UK. Any additional cost is voluntary- generally the more spent, the sooner the divorce
Hi Jeff!
Excellent video… The way you explain finance is simplistic and I my add, Harvard level… You truly are an effective speech car. Thank you for your outstanding videos.
Respectfully,
Jimmy USAF🇺🇸😇🙏👍✝️💜🇮🇹
1996 Camry owner here. 267,000 miles on it and still going strong. Did have to put some money into it recently to repair it, but well worth it given car prices today. If it will run for about 11 more months with no major problems I’ll come out ahead.
You could also say any big home improvement projects or expensive maintenance things like a new roof, etc.
Well said
I read somewhere that 70% of Americans will die in debt, basically a negative net worth. When all the creditors are paid off, there is nothing for the heirs. I can see how that can happen. People are living longer and past 80, 50% will have dementia and require expensive care. Very few people have long term care insurance.
15 yr mortgage or pay off early is best! No need to worry about mortgage plus repairs/maintenance during retirement!
Our retirement plan wasn't to get a lot of money but to reduce our cost of living when we retired. I retired about two-and-a-half years ago and we're living off social security. Well, primarily. But here's the deal: we moved from Seattle to thirty-two acres in rural Kentucky 11 years ago and absolutely loved it. We are now both 69. Because our home and property are fully paid for and are four cars are fully paid for, and our property has an annual property tax of less than $500 our cost of living here is less than a third of our social security payments. We pay cash for everything now one way or another. That is, we have two credit cards. We have the Costco executive credit card and we have an Alaska airlines credit card we always pay both off in full every month. The Costco card gives us more cash back than the membership fees by far. And the Alaska airlines card gives us free miles.
When your old you just don't want that much stuff. Life is very cheap. We're health nuts so we don't need it restaurants, and I should have mentioned that the tabs on all four vehicles around $280 a year. Do I have to confess I'm considering selling the sports car because I never use it anymore. It just sits in the garage shop with a battery charger on it it's also the most expensive to insure.
I should be really clear to about one of my reasons for the doing it this way. We pay no state or federal income taxes at all. Filling out my taxes now is a fifteen-minute job. I don't have to think about taxes or tax deductions or anything like that. I just live my life like people did in the 19th century. Except we have Amazon and the internet. 😎😊
My wife and I have set aside a certain amount for future weddings. Children will undoubtedly kick in more for the events. I wish that we could have a paid for home as well, but at least we have a 2.5% interest rate on a 15 year mortgage. We might be able to increase payments to pay it off faster in retirement.
It’s hard to beat that 2.5% interest rate and on a 15 year loan!. No need to pay it off early, as you probably don’t get any tax benefits from the mortgage loan anymore. Hold onto your money when you have it in retirement in case you need that money for unforeseen circumstances.
I was taught to avoid debt and not pay interest. Pay cash for a vehicle you'll drive for years. Winner.
You're correct in saying our lists may vary according to our circumstances. For me , no children , so that knocks 2 items off your list. The #1 on my list was to pay off my mortgage, which I did. I can't see how anyone would stop working without doing this first. Unless, of course, they have plenty of money. I don't.
Live your life. I keep kicking the can down the road when it comes to retiring. I have no debt but need a new vehicle. I'm done next year at 64 no matter if I'm debt free or not. I'm going fishing in my new vehicle that I will owe money on and will sleep just fine at night.
Totally agree on that
We live once
‘Murica
thanks to my 7th Grade Math Teacher Mr. Flattum for teaching us the defintions/differences between the mean, median and mode averages.
EXACTLY!
The NJ education system should require a class like this to all high school seniors! Really!
If recently retired, one should assess the spread between your mortgage rate and current MMF rates. if your mortgage rate is below 3.5%, play that spread for the next 18-24 months (could be longer of course). if you simply don't like debt, then by all means pay off your mortgage, but I would rather take advantage of this (somewhat rare) positive spread environment.
Some of us don’t chose when we will retire when medical conditions dictates early retirement you will find that paying things off aren’t going to happen until the loan ends. My house will be paid off in 7 years what’s the rush half the payment each month is taxes and insurance those two bill will be there even when the mortgage goes away.
Geoff, please do a video on supplemental health insurance for retirees. Do you recommend any financial planners in Minnesota?
My brother spent months doing the research and he recommended AARP, that is what I have gone with and I have been happy. So far, no medical bills. I pay around $170 a month for Medicare and around $212 a month for the supplemental. I am with Humana for prescription supplements, costs around $25 a month. I just got a notice today that Humana is going to start offering a senior dental plan starting at $18 a month.
An ARM at 5.25% dropped to 3.5% at the end of five years, then down again 3.25%, then 3%. I had chosen an ARM because I knew I would only need a mortgage for about 8-9 years. Now I'm retired and totally debt-free. An ARM worked for me!!!
Rates are going up now. People are being priced out of their house.
You are very fortunate. Congrats! Most people don't end up in your situation
I never carried any debt...paid off my house in 07 (retired in 2020 at 59) Paid off credit card every month since 1981 when I first got one, Amex which you had to pay off) Paid cash for new car in 2018...I mean debt doesn't matter much if your living on enough money....
Also it helps to be an electrician, plumber, and builder...I also do my own mechanical work on my cars. Have a Backhoe for yard work (Paid for)...Still build my own PC's for video gaming...Only thing I spend money on is golf...and a nurses aid for my disabled wife 6 hours a day...That amounts to 40K a year.
Downsizing your home is stupid. If you get a smaller home in a cheaper neighborhood, you will be living shoulder-to-shoulder with struggling families with lots of kids who rent their houses and don't take care of the property. Also - you won't have any room to host visits from kids and grandkids, holiday dinners, etc. Personally - I spent decades working my butt off to get out of a small house in a high-crime area and into a large home in a gated community. Now I have a grand piano, a home theater room, a four-car garage, a huge yard for my dogs, and plenty of room for guests. Also, the high HOA fees and $1 million+ price of homes in my area ensures that it probably won't become a run-down rental neighborhood. There's no way I will ever downsize.
Good point. I live next to families with screaming kids!
I anticipate requests to pay for or help pay for grandkids college. Maybe an additional item, like weddings, that inevitably comes up.
No is an answer
I am not going to pay for my grandkids college, unless I am sitting on $5M cash. When I am dead, they will have their money.
I agree with everything except not paying off a mortgage at 3%. You have a much better chance of paying off your house at 3% than you do at 5% or 6%. Then you would be debt free and have lots of cash to invest. Wealth piles up quickly with no house payment or other debt. He didn’t suggest this, but do NOT use your house like an ATM machine (taking out loans against your equity) and stop taking financial advice from your broke friends.
Truth Sayer, I told my friend the same thing, his liberal buddy, still renting giving him ( who had paid his house ) financial advise. By the way , this is not financial advise but look into this stock QSEP. This stock might make u wealthy with a little bit of investment.
Agree pay off your house. One does not know what the future holds so get this out of the way. A lot has to go right health, economy, family issues. Pay it off or you might kick yourself later.
@@judymckee5992 No offense but I don’t buy penny stocks and I don’t take stock tips from random people on the internet. I’m sure you would love us to drive up the price so you can get out of it. No thanks. That thing is dead. I am an investor, not a speculator.
@@truthsayer9534 , No intention of doing that. I understand with so much greed going on and hearts of man being corrupted.
Possibly add or discuss car loans in retirement. Thanks for your expertise. Johanna Cassidy
Thanks for the video, Jeff! One thing you didn’t mention is cars. I had kids late and retired early, so both my daughters are still at home. ,One of our cars was paid for, but when I retired I paid off the other 3. I just didn’t want any car debt, and I’ll never have any again. What’s your take?
Well for me
1) I don't carry outstanding CC dept
2) I only went to community collage and at $5 a unit I paid as I went.
3 &4) I never had nor ever wanted any kids so that does not apply to me.
5) Of my three houses
5a) A rental in a state that I will never return to live in and at the end of the morgage I have a massive balloon payment that's due. As long as the house is rented the loan drops my taxable income so if I'm still alive when the morgage baloon paymet is due I will be getting another 30 year morgage on the property.
5b) I bought with cash and it never had a morgage.
5c) I have a 15 year morgage that will be paid off 6 months before I turn 65.
5e?) My BFs house I might be acquiring that has a current 30 year VA loan on it that I am trying to take over as he is looking at foreclosure that I will be moving into and houses B & C will become rentals.
6) I'm way to old now to do what was on my vacation bucket list as I am not physically able to do it anymore. I should have done it two to tree decades ago. I have been all over the USA in a semi truck so traveling does not hold an interest for me anymore.
&) I have $1mil in S&P 500 taxable and ROTH retirment accents.
At being in my early 50s I could literly retire today but I don't want to for two reasons. 1) Actualy retiring is really scarry as I don't know what may happen in the future and the income from working is a major security blanket. If the stock market drops 90% like it did in the 1929 i still have my safe job to pay my bills. 2) Working gives me something to occupy my time when I don't have anything better to do high is the vast majority of my time.
Good things to consider! I skipped to small home that is paid off, no mortgage, no kids, no wife, never took or will take a vacation.
Paid off all debt except home. This freed up most of my paycheck to pay off home. The regular monthly payment plus double that to principle, monthly.
Should need be, we could sell a couple vehicles and pay off home (say one of us dies).
Working until death wasn't on the list, but that is the only option for more than half of us.
Poor choices were made.
I’m glad I came across this tonight. I’ve had no debt for the last 10 years other than my mortgage. I live in San Diego county which is a HCOL area. I’m planning on retiring after the first quarter of 2023 and would rather have no mortgage but it makes no sense to sell funds out of my nest egg while the market is down to pay off a 2.875% mortgage which I refinanced in 2020. I still owe about a third of my house’s current value. What I pay in mortgage is dirt cheap for the area. So I’m going to continue with my plan to retire with a mortgage and then I’ll reevaluate in a year or two. I can always pay it off out of my nest egg when the market recovers.
srconrad, This is not financial advise, but we retirees need to have some savings to buffer us, I recently know of this stock QSEP, look into it and invest what u can afford to lose. This stock has a working patent.
@@judymckee5992 scam
@@lisa408t , No iam not a scammer, just giving info.
Thank you. I also got a new boiler and paid that off, as well as new hot water heaters, they were not on my list, but, both were needed immediately, so I continued working until I could pay them off. Luckily, at that time, I was over my full retirement age, so used the extra social security I got each month to pay rapidly while I lived on my normal income level. I am going to admit something sort of crazy, but, I knew that if I waited until I was on social security, my student loan payment would be low on income based repayment, so I did that, which fell into the pandemic payment on hold, and worked out perfect for me. I recommend applying for forgiveness, which I am waiting for an answer, because I worked in healthcare and qualify for that... possibly.... I also made it a point to have dental work done, get eye glasses and make sure I had an extra amount of some things I might need.... like oil and windshield washer fluid etc. I also had some minor repairs done to my home.... most of the rest I can handle, or I will try for a grant from my county or state. My vacation will have to be cheap, but... I love to read, and lying in bed can feel like I am anywhere depending on the story. Love to you and all!
Why do you need to HEAT HOT water?!?
@@johnp139 They are called both, either a water heater or a hot water heater, but your point is funny.
All items check except for some credit card debt that was used to upgrade/maintain long ago paid off house. When I retire soon {18 months} will have enough income to afford travel and a new car every few years or so. We are Florida natives so we don't have to sell and move. LOL!
Check on all 5 items. Plus check on items 6-9 (no mortgage on my home + 3 rentals).
In short, no debt whatsoever. Period.
I have never had credit cards and my home and several other people's homes are paid off. My tenants' rents are insured. Time to retire with no stocks and shares. QED?
I’m curious to know, as a percentage, how many new retirees have each of these paid up.
We were completely debt free before retiring. Being healthy and with no payments, we were able to travel and enjoy ourselves for years. Then over the past two years we had to have multiple surgeries, We're fine and raring to go again. And we are able to go because in addition to our health insurance the HSA we'd been building through all those healthy years before and after retirement covered our medical costs. So our retirement fun didn't have to be interrupted by financial setbacks caused by medical stuff.
So far, an HSA has worked for us, but do you consider them the best way to handle these unexpected medical issues?
I became "debt free" 5 years ago at age 60, and when I retire in The Philippines (in a year) I'll have
A LOT of money saved, so with that, the interest earned, Social Security and about 40 hours of
work monthly, I'll have over $4,000 a month coming in.
Paying off your mortgage is a great piece of mind, and that's where it ends basically. Depending on your rate and the area of course. At 3.5% 30 years fixed, 10-12% going inflation, rising real-estate prices and FED raising interest rate every 2 month. It doesn't make much sense to lock cash into highly illiquid asset like a house. You can come up on top just by buying treasuries with that money. If you are in a pickle when you need some cash, you can sell exactly as much as you need and pay little to no fees doing it. If you lock up you cash in a house, the only alternative to selling is a HELOC. That's not really free and you basically back where you started anyway. Your mileage may vary of course, but there are more cons than pros in paying down your mortgage.
@Gee Eee
Where are you obtaining these percentages you are using from?
Based on some of these things you describe....if money is that tight for person are they really in a position to consider retirement?
For me the basic idea is to live within means .. cash flow the consumables .. save for (rather than than use debt for) any depreciable asset .. and plan to have zero debt on retirement
Do I keep a mortgage at a low % and pay it off as slow as possible so I can invest at a higher %? I hear that idea a lot .. I measure that in net cash flow not %, and I account for risk (I didn’t leverage the house I lived in more than 50% - even though the bank would allow 80%)
regarding your Q on paying off the mortgage, take a look at your taxes and determine if you are still getting a tax benefit from the interest paid. Standard deductions went up a few years ago and if you are far enough along in your loan term the interest will reach a point where this benefit disappears. If this is the case the argument for maintaining your mortgage is somewhat weaker.
I'm almost 64, and I've got Items 1-4 taken care of, but I am considering leaving my rental apartment to buy a house (30-yr VA loan) which I know I will either die in or sell before I die. What do you think about that?
I have a bit under 150K on my home with no other debt at 52. I'm almost there.
I think the house should be #1.
Either way being fully debt free is a must.
ALSO anything with a long term loan.... may be covered but, any outstanding expenses PAY OFF before leaving your job or business..... at 66 5 [for me] use the first few months of social security to pay off whatever is there as possible, any pension money....use it to pay ALL YOUR LOANS, then after there is a Zero balance to your outstanding expenses.....then consider retirement, not before.
Good stuff!
My 2 cents:
1 - Pay off credit cards ASAP. Don't care if you're 5 minutes from retirement or 5 decades away. Time to wave goodbye to Visa is always NOW.
2 - In most cases, your monthly mortgage is the biggest bill you got. Why would you want to face that monster without a paycheck. Maybe bring that item to the top of the list. (Does not apply to people with multi-million dollars stock portfolios).
3 - Car payment - see #2 above
4 - Student loans / kids' weddings? You're retiring. Shouldn't those costs been taken care of long ago?
5 - Bucket list vacation - get a frequent flyer mileage earning credit card. Start stockpiling. Have a good trip...
I agree with your list. I'm about to have #2 payed off in a year then it is maximizing investments and savings.
Right on. #4 is NA. #5 is the first stage of retirement. You will get tired of traveling after awhile. Have a good health insurance plan, should be added as #6. I'm 90 years old and into my 22nd year of retirement. I don't know what is the last stage of retirement, but I got everything I need or want.
EXACTLY!!!
I retired 20 years ago at 45. Mortgage vs paying off your house. On a spreadsheet a mortgage can appear as better than paying off a house. However I'm not a spreadsheet. The assumption is money would earn more in investments. OK, but I hate investing. Mainly because I suck at investing. I'm more of a gambler. I just have no interest in researching and understanding these matters. I didn't retire in order to become self-employed as an investor. Market volatility stresses the crap out of me. I've been through several stock market crashes with hardly noticing. That has a value for me. I didn't retire in order to be stressed.
Another mortgage issue for me is the payment changes my standards. My last mortgage was $2200/mo. That made a $300/mo car payment look cheap to me. Spending another $1000/mo on who knows what stuff seemed cheap. Once the mortgage went away the next biggest payment suddenly looks huge and start asking myself "Do I really need a $300 car payment?" That thinking caused me to eliminate almost all my spending while becoming happier. Dealing with fewer companies = me happier.
I agree, Water Bug. Becoming debt free simplifies your life and makes everything so much easier. We set our few monthly bills (phone, utilities, etc.) on autopay. We only pick up the mail once or twice a week. A friend tried to interest us in a business venture and we were baffled. Why on earth would we want to complicate our life right now? It's perfect.
Water bug, I don't like to be a gambler but this cheap stock QSEP even with 5k investment, leave it for 6 months, will make a bundle.
@@judymckee5992 scam
Keep your car and start putting away money to purchase your next one. Of course that means buying a RELIABLE car (not from an American company).
I met at least two men who retired from public safety, found another full time job, and built new houses, right back into being an indentured servant
I have not paid off my home because I am making a higher return on my investments versus the paltry 3.25% on my mortgage...When I turn 65...I only have to pay the property tax that is related to the School Bond & County Bond millages...
I choose to pay off my $328K 2.625% 15 years loan in 24 months, December will be my last payment. Just don’t want to deal with payments anymore.
1. House is paid for
2. Wedding My Son is not even dating.
3. Son’s Collage Degrees I paid for his Masters Degree was on him.
Just FYI worst money ever spent he drank the Cool Aid and is now Woke and Unemployed !
4. Credit Cards I have No debt period and Cars are paid for also.
5. Vacation when I retire I want to Kayak the Missouri River full length cost $7,000 easy will take 100 days of camping fun.
Been to Europe Mexico and Canada.
Nothing Nicer than USA 🇺🇸
Do I have enough in savings yes but my Wife plans on building a second home and I will pay cash for it.
Am I rich No but my wife and I have always lived within our means and saved !
I paid off my mortgage by age 35. But if I could go back and do it again I wish I bought FAANG and Tesla. I did eventually starting at age 45. I wasted 10 years with highly conservative saving.
I would also say a paid off vehicle, too. If you know that you will need a new vehicle in the next 5-10 years then it's probably better to enter retirement with a relatively new, reliable, paid off vehicle so that you don't have payments for at least the first 5-10 years.