Tag Archives: Retirement

Fast-track Your Mortgage Payoff, Lower Your Retirement Debt

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When retirement looms, financial stability is a gnawing concern for most people. Have I saved enough? What will inflation do to my nest egg? Will Social Security remain solvent? What are the health wildcards I haven’t planned for? As such, it’s wise to slash expenses and debt as much as possible, with the idea of entering retirement debt-free. For some, that means paying off the mortgage by accelerating their mortgage payoff.

Experian (https://bit.ly/3srAgU7) found that the average mortgage balance debt by generation in 2022 was:
Generation X (age 42-57): $274,406| Baby Boomers (58-76): $189,155 | Silent Generation (77+): $139,999

If you’re able to afford to put extra cash toward your mortgage, doing an early payoff can be a powerful strategy that not only cuts interest payments but lightens the financial and emotional load during retirement, bringing peace of mind, more money for hobbies, vacations, and funds for healthcare and long-term care expenses.

Still, before deciding, you must take a complete look at your financial picture to be sure that a faster payoff is the best way to achieve your goals and to understand the potential sacrifices and downsides of such a move.

Here are nine considerations.

1. Understand the risks. If you have a relatively low mortgage rate, could you miss out on higher returns on your money by putting the extra toward your mortgage? Will you miss out on mortgage interest deductions? By devoting money to your mortgage, you’re lowering your liquidity. Will that lack of liquidity adversely affect your other long-term goals or short-term needs? For example, are you hoping to give a chunk of money to help a child with a down payment or planning to pay some of your grandchild’s college costs?

2. Examine your debts. If you have credit cards, personal loans, and other obligations, paying those off is better before accelerating your mortgage payments. First, pay off debts with higher interest rates than your current mortgage because consumer debt typically carries higher interest rates than mortgages. 

3. Understand your mortgage agreement. Read your agreement’s fine print and talk to your lender to be sure there aren’t prepayment penalties and that you’re allowed to make extra payments.

4. Calculate your savings. How quickly do you want to pay off your mortgage? Can you afford to shave five years or ten years off your mortgage? Use an online mortgage calculator to see how much principal you must pay every month or year to pay off a loan in a certain number of years and how much you’ll save with an early payoff. The savings can be significant. According to a NerdWallet calculator (https://bit.ly/45MhzZR), for example, if you took out a $300,000 30-year fixed loan at 5.5%, have ten years left, and decide to pay it off in five years, you’d have to pay an extra $206.75 monthly. The move would save $89,796.84 over the life of the loan. 

5. Develop your repayment plan. Will you make an annual lump-sum payment or extra payments monthly or bi-weekly? One advantage of spreading the additional payments across the year and making bi-weekly payments is that you lower your principal balance each month, creating a smaller balance on which interest is calculated. 

6. Look at your budget. How much extra money can you afford to put toward your mortgage? Where can you cut back? Also, consider the sacrifices you’ll need to make and decide if missing out on a vacation or cutting back on hobbies is worth it.

7. Don’t sacrifice retirement savings. Have an adequate emergency fund before shifting money to speed up your mortgage payoff. Also, be sure you’ll still be able to max out all your retirement vehicles like 401ks, Roth IRAs, and Health Savings Accounts and make catch-up contributions.  

8. Pay the right way. Be sure to tell your mortgage holder that your extra payments will be applied to the loan principal, not the next month’s mortgage payment.

9. Talk to experts. Remember that there’s no one-size-fits-all approach with finances, so get advice from financial pros—your accountant and financial planner, for example—to understand the risks and the impact an early mortgage payoff would have on your other goals.

Top 10 Rightsizing Tips for Seniors

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Top 10 Rightsizing Tips for Seniors

Are you considering selling your home and retiring? Maybe somewhere warmer? We all know the main areas for retiring are Florida with many cities being ranked in the top 10. I was surprised to see Myrtle beach- SC, Ann Harbor MI, and Lancaster, PA in the top 10 and I did not see Arizona in the top 25. In fact it looks like they were #38 in the 2020 ranking. Times are changing for sure! Where do you think Washington ranked? We ranked 46 out of 50!

Over the years seeing Seniors in my church, neighbors and with my own parents I have seen many challenges as we age that make you decide to move. After struggling to help one family move that had many medical challenges I decided I need to learn more to help this population and is why I am proud to be an Seniors Real Estate Specialist (SRES). Helping those make a move that is more senior friendly and working with their family in taking the time they may need for their next adventure in life.

So where do you start when you are starting to consider a move and have lived in your current home for 20+ years?

1. Start with the easy stuff.

Eliminate anything that’s broken, damaged, or no longer wanted. Then, go to the out-of-the-way spaces like attics, crawlspaces, and garages. Progress in these “easier” parts of your home will help you build momentum and tackle the harder-to-decide areas.

2. Ask yourself,  “If this disappeared tomorrow, would I run out and replace it?”

If you wouldn’t miss it or need to replace it, it’s probably not worth keeping.

3. Don’t be a storage unit for others.

If friends or relatives have left things for you to store, it’s time to ask them to pick up their possessions—or arrange to have them shipped. You may need to be tough and set a firm deadline, after which you will donate the items.

4. Ask for help.

Although you can do much of this work on your own, a family member, a good friend, or even a professional organizer can help make the job more manageable.

5. Decide what’s important.

Pretend you are moving overseas, but you can only take a severely limited number of items because it costs a small fortune to ship them. What items belong on your list? These are the things that matter most to you!

6. Is this something from a lifestyle I no longer have or want?

For example, if you have three cabinets full of plastic containers, but only cook for one or two people, it’s reasonable to eliminate a few plastic sets—and dishes, pots, and pans.

7. Schedule a regular time each week—or several days a week—to work on rightsizing.

Realize that rightsizing is a life-changing marathon, not a sprint. You didn’t accumulate everything overnight, and you won’t sort it all out overnight, either.

8. Value what you keep.

The fewer things you keep, the more you will treasure and enjoy what you have, instead of tucking items away in a closet or stacked among dozens of other things. These are the select, meaningful items worth having in your personal space.

9. Prevent new collections from forming.

Instead of material gifts, ask people to spoil you by sharing time, enjoying new experiences, and helping you indulge in luxuries (spa certificates, imported chocolate, a musical or other theatre production, gift certificates for dinner out, etc.). In other words, ask for special treats that you love and want, but don’t always buy for yourself.

10. Use age to your advantage.

Now is a great time to give items to family members that you eventually want them to have. Take a photo (preferably a digital one) of your recipients holding their treasured gifts and create a scrapbook of “next generation” memories. These images can serve as powerful reminders of your most cherished items moving forward into posterity with the most special people in your life.

It takes time once you decide you want to start making the steps for a move. The average time frame I work with Senior sellers that have decided to move is a few months to a few years. I had one couple that I worked with for 3 years! They had been in their home for 32 years. Raised their kids and finally decided it was time to move into a ground floor condo with no steps and then go see the world. It takes time to navigate and sometimes many meetings to help them make decisions and keep them on their path. I helped with so many referrals and even some of the heavy lifting before we did the heavy selling. 🙂

Want more information on what a SRES can do for you? Visit the consumer site to learn about the value of working with a SRES and content with topics to assist you like Senior housing options, adapting your existing home and more.