SHOP PRODUCTS
Houzz Logo Print
wkate640

difference of opinion on use of retirement savings

wkate640
10 years ago

My closest friend and I disagree on something: She has a retirement portfolio of $1,000,000 and has a $100,000 balance on her home mortgage. (These numbers are close but not accurate to the penny.) It's an ARM, low now (3.25%) but will most likely go up in five years. She pays $650 per mo. on the mtg. She has another 20 years to go with the interest rate probably going up often. Let's say she retires and takes 4% of that million every month--$3333 and still has to pay 650 out of that, bringing down her available monthly funds to $2683. If she pays the $100,000 off, she will then have a portfolio of $900,000. 4% of that comes to $3,000 per month but now she has no debt. She loses $333 per month, but doesn't she actually gain $350 per month by not having to pay the mtg. payment any more? She thinks she's better off keeping everything invested and taking the mortgage deduction for interest at tax time. What do you all think?

Comments (16)

Sponsored