Questions about my mortgage

[BorsTV]

I'm currently working on building my retirement savings and looking into the best ways to secure my future. I've got a question about my mortgage, which has a 6.25% interest rate. I'm wondering, why would it make sense to dip into my retirement funds to pay off this loan? After all, my diversified portfolio is expected to bring in returns of 7-9%. Plus, I still get to enjoy that mortgage interest tax deduction. It's kind of a tough call, isn't it?

 

[ClaireR]

I'm currently working on building my retirement savings and looking into the best ways to secure my future. I've got a question about my mortgage, which has a 6.25% interest rate. I'm wondering, why would it make sense to dip into my retirement funds to pay off this loan? After all, my diversified portfolio is expected to bring in returns of 7-9%. Plus, I still get to enjoy that mortgage interest tax deduction. It's kind of a tough call, isn't it?

That's a great question, and there isn't a simple answer that works for everyone. If your investments earn 7-9% and your mortgage rate is 6.25%, you might come out ahead by investing instead of paying off the loan. However, this only works if your returns are steady and you're comfortable with the ups and downs of the market. These swings can be stressful, especially if you're retired and relying on your savings. The mortgage interest deduction can help, but its benefit depends on your tax situation and whether you itemize. Many people see less value from it since the standard deduction increased. Are you planning to retire soon, or do you have more time before that? If retirement is within 5 years, lowering fixed costs like your mortgage could make things easier and give you more peace of mind, even if it doesn't offer the biggest financial return.

 

[Brookz]

Using retirement funds to pay off a 6.25% mortgage is usually a bad idea, your investments likely outperform that rate, and you lose compounding and potential tax advantages.

 

[Shades]

Depending on market returns to outpace a 6.25% guaranteed liability is gambling, not strategy, retirement accounts can crash overnight, but that mortgage debt is relentless, compounding risk every single month you wait