Author Topic: Advice needed on paying extra on mortgage or funding retirement  (Read 1300 times)

littleds

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Fairly new to MMM.  Debt free except for our home, and unlike many of you pretty close to "normal" retirement age.  That said, would still LOVE to retirement as early as possible. Ages 56 and 57, and our question is do we pay extra toward our mortgage (14 years left) at this point in our lives, or build up our retirement?  We have approximately $4,000 extra a month after maxing out our Roth IRA's and contributing 13% (mandatory) into our retirement at work; $163,000 left on our mortgage at 3.25%, and $375,000 currently in retirement. 

Both of us will have a government pension, which is guaranteed for life (I know, nothing is guaranteed), however unless it changes our pensions will pay out until we die, regardless of whether our portion in the pension fund runs out or not.  Our pension is currently 50% fixed, and 50% variable fund.  Over the last 28 years the fixed fund has averaged 10.32%, and the variable 19.10%.

Thanks for any advice you can give us. 
Deb

MDM

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Re: Advice needed on paying extra on mortgage or funding retirement
« Reply #1 on: August 15, 2015, 10:44:41 PM »
littleds, welcome to the forum.

The short answer is "under those conditions, it makes more financial sense to pay the mortgage minimum and continue to invest - but if it makes you feel better, go ahead and pay the mortgage."

See also http://forum.mrmoneymustache.com/forum-information-faqs/frequently-asked-questions/ and scroll down to Investing.

Good luck!

dess1313

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Re: Advice needed on paying extra on mortgage or funding retirement
« Reply #2 on: August 16, 2015, 03:33:28 AM »
Its going to a risk and personal decision.  Yes you have been making X% in the markets and doing very well.  Your house interest is low in comparison.  purely based on history the returns on the market are higher. 

But would having that mortgage paid off make it easier for you to retire or do you still need to build your retirement funds further despite your pension?  Not sure if your pension would cover 100% of your costs when you retire yet or not.  If the mortgage is the only thing preventing you from retiring then pay that sucker off asap.

I'm not a risk taker so i worked on my mortgage before i invested.  But i'm not in such a secure place as you were.  Why not do a bit of both?  Mitigates the risk both ways then if the markets have a bubble or if housing crashes like it did in 2008/09  Splitting it half and half you could have your mortgage done in 10 years instead of 14.