Retirement in America

John Galt

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I've been given that advice many times. I get math and I'm not going to say they are wrong --- but I could give a lot of reasons it makes sense to get the house paid off too. Cash Flow has power.
There’s nothing wrong with having your house paid off early, but you can also juice your cash flow by using the amount you would have used to pay off your house to buy higher yielding investments like real estate, preferred stocks, business development companies, foreign REITs, private equity, MLPs, etc. From a standpoint of building wealth and maximizing your investment returns, it doesn’t make sense to pay the house off early in this environment. But I get what you’re saying- it feels freeing.
 


Ogee Oglethorpe

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There’s nothing wrong with having your house paid off early, but you can also juice your cash flow by using the amount you would have used to pay off your house to buy higher yielding investments like real estate, preferred stocks, business development companies, foreign REITs, private equity, MLPs, etc. From a standpoint of building wealth and maximizing your investment returns, it doesn’t make sense to pay the house off early in this environment. But I get what you’re saying- it feels freeing.
I put a tremendous amount of time and thought into paying off a house last summer, a lot of research. Last fall I paid off our primary house for the wife's birthday, about 22.5 years early. Plenty of arguments on both sides as to paying it off versus investing that money. At the end of the day, it was the thought that counts I guess and I think we're doing okay in retirement preparation in other areas. And that was not long before the election and with at least SOME concern that a Grandpa Joe election would cause some major market uncertainty (which I still wouldn't rule out), I had a hard time plopping down a massive chunk of change at that time into investments.

I'm sure there are many that say it wasn't the best use of funds but I don't regret it one bit, and would probably do it again. I won't be that aggressive with other property though.
 

Spoofin

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Totally agree, there's an abstract psychological value you get too from paying off your house early.

Personal finance is a passion of mine and it irks me to no end that schools do NOT teach anything about it... especially in a country where most people live well beyond their means with no safety net. I am 100% self-taught as well and have taken some of the FIRE (financial independence/retire early) movement to heart. Mister Money Moustache blog is incredible if you don't know anything about it.

Like Spoofin I'm teaching my kids everything I can. My wife and I are on plan to retire comfortably at 55, but there is no reason my kids shouldn't be able to retire earlier than that, or at least have the flexibility to work part time at something they enjoy; versus being forced to work until 65 or 70...

As far as what I'm invested in I take a pretty hands-off approach as mentioned above. I'm not smart enough to predict the winners or losers, so I just throw as much money as possible at index funds with brute force and expect them to do what they've been doing in the long term for decades.
I love it. Thanks for the tip ont he blog too - I don't know that one.

55 - Nice! I'm on track for 60, so you got me. Yes - Index Funds here too. Data shows that is the way to go unless you know something 75% of folks don't. I certainly don't.
 

Spoofin

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There’s nothing wrong with having your house paid off early, but you can also juice your cash flow by using the amount you would have used to pay off your house to buy higher yielding investments like real estate, preferred stocks, business development companies, foreign REITs, private equity, MLPs, etc. From a standpoint of building wealth and maximizing your investment returns, it doesn’t make sense to pay the house off early in this environment. But I get what you’re saying- it feels freeing.
As I said, I won't say the other approach is wrong and of course math would back up your position. I happen to be about 5-months from having my house paid for and I have a long list of reasons that was the right thing for me. To each their own.
 



Wally

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I love it. Thanks for the tip ont he blog too - I don't know that one.

55 - Nice! I'm on track for 60, so you got me.
What about the labor shortage?
Do your duty and stay on until 70.🤣

The boss wants to be done at 55 but she told me I have to work until 60...😫😫😫
 

Spoofin

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What about the labor shortage?
Do your duty and stay on until 70.🤣

The boss wants to be done at 55 but she told me I have to work until 60...😫😫😫
The labor shortage will end as soon as we pass more climate-related bills. I just heard that 🤷‍♂️
 

short ornery norwegian

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Well, I am retiring at Thanksgiving.

turned 66 in September. will hit full retirement age for Social Security in early November.

Ironically, my retirement savings started in '91. I won $2,000 on a slot machine in Vegas and opened an IRA with my local Edward Jones Rep. (this was in Plateville, WI).

Later, got more serious about saving. Have been putting money into mutual funds and also into an IRA. In recent years, have maxed out my IRA contributions.

used to have a 401K plan at work, but my company changed ownership, and the new owners had no company match.....so I cashed out the 401K and put those funds into mutual funds.

I have somewhat over $400,000 in investments. I own my house outright. Cashed in a life insurance policy and used it to pay off the mortgage. Own my car outright, so my only debt is whatever is on the credit card from month to month - mostly a couple of on-line subscriptions.

I won't be living high off the hog, but between interest on my investments and Social Security, my retirement income will roughly match what I was earning at work.

at some point, I stand to inherit something from my mother's estate, but Mom is 95, in relatively good health, so I'm not counting on that money anytime soon. Mom's house is owned by myself and my 3 siblings in a joint trust, so I will get 25% of the proceeds whenever the house is sold.

my plans for retirement - do some fix-up work on my house and yard. read, listen to music, watch old movies, watch some ball games, get more exercise, and ----- get up every day without having to worry about what I have to do at work. that should add years to my life. H*ll, I might even live long enough to see the Gophers go back to the Rose bowl......
 



Ogee Oglethorpe

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Well, I am retiring at Thanksgiving.

turned 66 in September. will hit full retirement age for Social Security in early November.

Ironically, my retirement savings started in '91. I won $2,000 on a slot machine in Vegas and opened an IRA with my local Edward Jones Rep. (this was in Plateville, WI).

Later, got more serious about saving. Have been putting money into mutual funds and also into an IRA. In recent years, have maxed out my IRA contributions.

used to have a 401K plan at work, but my company changed ownership, and the new owners had no company match.....so I cashed out the 401K and put those funds into mutual funds.

I have somewhat over $400,000 in investments. I own my house outright. Cashed in a life insurance policy and used it to pay off the mortgage. Own my car outright, so my only debt is whatever is on the credit card from month to month - mostly a couple of on-line subscriptions.

I won't be living high off the hog, but between interest on my investments and Social Security, my retirement income will roughly match what I was earning at work.

at some point, I stand to inherit something from my mother's estate, but Mom is 95, in relatively good health, so I'm not counting on that money anytime soon. Mom's house is owned by myself and my 3 siblings in a joint trust, so I will get 25% of the proceeds whenever the house is sold.

my plans for retirement - do some fix-up work on my house and yard. read, listen to music, watch old movies, watch some ball games, get more exercise, and ----- get up every day without having to worry about what I have to do at work. that should add years to my life. H*ll, I might even live long enough to see the Gophers go back to the Rose bowl......
SON, I'm pulling for you like no other and I hope like hell you have the best retirement possible. It sounds like a pretty damn good plan to me. You've earned it, looking forward to you not being a member of the work force.

I'll raise a cocktail for you around Thanksgiving to celebrate
 

Blizzard

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No, quit bragging. :)

Not at all. We have a few different pension plans where I work. A traditional, defined benefit that was locked in some years ago and then closed to new employees and then another one which I still don't understand how it works. Traditional pensions are still out there. My son recently started with the City of St. Paul. PERA benefits are spectacular.
 


Full Speed Ahead

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I make it a point to not tread in the OTB waters very often, so if this has been discussed in detail in some other threads, sorry, I don't keep up with OTB posts...

... A big looming issue with retirement is many folks are counting on Social Security payments coming in during their retirement years. In about 12 years, Social Security payments will hit the wall and they won't be able to continue as is. Spending trillions now, means we won't have the ability to print more cash to make full SS payments, they'll need to be cut pretty significantly. Bottomline, if you're counting on Social Security and Medicare payments to help you along in retirement, you could be in a serious world of hurt.
 



Full Speed Ahead

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Some I know say you should mortgage your house to the hilt at these interest rates and invest the money instead, I'm with you tho, like having the house paid for.
Nope. Mortgage rates are ridiculously low plus the interest payments are partially written off on your taxes. Get a low fixed-rate 30-year mortgage (pay points to lower the rate), leverage the loan to your max (get as big of a mortgage as you can), pay off the minimum amount each month, and let inflation plus those tax subsidies work to your advantage. A 2.8% mortgage subsidized by taxes with 6% inflation is a nice deal. Just make sure you buy a house where demand is on the increase, such as downtown Austin, TX about a mile from the new Tesla HQ.
 

BleedGopher

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Totally agree, there's an abstract psychological value you get too from paying off your house early.

Personal finance is a passion of mine and it irks me to no end that schools do NOT teach anything about it... especially in a country where most people live well beyond their means with no safety net. I am 100% self-taught as well and have taken some of the FIRE (financial independence/retire early) movement to heart. Mister Money Moustache blog is incredible if you don't know anything about it.

Like Spoofin I'm teaching my kids everything I can. My wife and I are on plan to retire comfortably at 55, but there is no reason my kids shouldn't be able to retire earlier than that, or at least have the flexibility to work part time at something they enjoy; versus being forced to work until 65 or 70...

As far as what I'm invested in I take a pretty hands-off approach as mentioned above. I'm not smart enough to predict the winners or losers, so I just throw as much money as possible at index funds with brute force and expect them to do what they've been doing in the long term for decades.

We are kindred spirits. I'm very big into the FIRE Movement as well, listen to a lot of Podcasts in this space, read a lot of blogs and even am part of a few FIRE Meet Up Groups. I have also attended the local Bogleheads Monthly Meetings which are great, although I'm usually the youngest in attendance by about 30 years, except when I bring my kids, then they are the youngest by about 60 years.

Go FIRE Movement!!
 

ekeg0002

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We are kindred spirits. I'm very big into the FIRE Movement as well, listen to a lot of Podcasts in this space, read a lot of blogs and even am part of a few FIRE Meet Up Groups. I have also attended the local Bogleheads Monthly Meetings which are great, although I'm usually the youngest in attendance by about 30 years, except when I bring my kids, then they are the youngest by about 60 years.

Go FIRE Movement!!
Nice! Awesome that you bring your kids, get them started early and have a plan before they even start working! It is awesome to hear the success stories of people who picked up on FIRE and are living it.
 





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