pay off mortgage or retirement invest
Ok... so here's another reason why one shouldn't pay off their mortgage. I don't think I've seen this explained yet in this forum.
Tell me if I have my head straight on this:
My main reason for wanting to quickly pay down a mortgage is for one reason: To have no debt... being debt free is something I value. This alone is worth something that often isn't figured into financial planning. (Sort of like buying a great new car is financially unwise, yet has another sort of value. Granted, new cars are probably FAR more financially damaging than paying off a mortgage!)
Ok. Getting to the point...so here is my thinking and it's very simple.
Instead of paying off the mortgage, take that same money... the extra principal that you were putting into the mortgage...and put it into your 401k/403b.
By investing tax free, you are getting to keep money that would otherwise be taxed away. By doing this, it seems to me that even with a very, very conservative investment you would come out much better off instead of using the money to pay down a mortgage.
I understand that this money will be taxed in retirement...but I expect my income in old age to be rather modest and taxed at a lower rate.
So is using the money for retirement rather than mortgage payoff a true "no brainer"?... or are there other factors to consider?