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Getting Personal
Getting Personal
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"Instead of paying off mortgages, we may want to consider mortgages as a way to diversify our portfolios."
This is the sort of inane advice people took to that got so many people into the mess we're in. If you still have a mortgage after retirement, then you are basically gambling your retirement residence.
Liz Weston's analysis of how large a down payment to make when downsizing omitted an important consideration.
The caller was contemplating a 65% down payment, a 15-year mortgage, and retirement in 10-15 years.
Weston emphasized the benefit of paying off a mortgage around the time of retirement, but didn't address alternative investments.
What if the caller makes a smaller down payment (but still large enough to get a good mortgage product), and invested a portion of the balance in different assets e.g. a variety of indexed mutual funds?
The caller could use the gains on the different assets to pay expenses.
And it's easier to sell a portion of a mutual fund than it is to refinance a mortgage.
Weston mentioned the tax benefits of a mortgage, which for some people continue into retirement.
Instead of paying off mortgages, we may want to consider mortgages as a way to diversify our portfolios.
