Should I Use Home Equity to Invest for Retirement? We have a small mortgage on our home and lots of equity. Should we refinance our mortgage to free up additional money to invest for our retirement? It’s true that more older Americans are retiring with heavy debt loads. But taking on additional debt when you are no how Much To Invest For Retirement bringing in income puts you in a precarious financial position.
In retirement, your income is fixed—you probably have Social Security, your retirement savings, and possibly a pension. No question, refinancing looks attractive now. At today’s low interest rates, freeing up cash for a potentially higher return is a tempting notion—after all, stocks have done pretty well in recent years. But it’s a mistake to compare today’s low mortgage rates to an expected return on investment, especially for retirees. Moreover, the basic math of refinancing may not make sense given your financial situation.
Let’s start with the refinancing rules. And now that you’re not working, it will be harder to get the best terms from a bank. Borrowing against your home will reset the loan, which means you’ll be paying more in interest over time instead of paying down principal. Refinancing also costs thousands of dollars in fees. So you’ll need to stay in your home for a long time in order to recoup those expenses. But when you’re older, you’re more likely to reach a point where you want to downsize or move.
As for those enticing investment returns, there’s no guarantee the money you invest will produce the gains you’re seeking—or any gain at all. Of course, every retiree’s financial situation is different. Refinancing might be a good solution if you want to pay off other high-rate debt. Or if you’re struggling to afford the mortgage payment, and you want to stay in your home, then refinancing could give you more of a cushion for your regular expenses. But that doesn’t sound like the case for you. Taking money from your home equity and gambling on what could happen by investing it is too much risk in your retirement.
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How Much To Invest For Retirement Expert Advice
That’s how much you need to retire, what could my current savings grow to? Borrowing against your home will reset the loan, what are the tax implications of paying interest? This should be the total of all your retirement accounts including 401Ks, what is the value of a bond?
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Enter the age you plan to retire. If you were born in 1960 or later, 67 years old is the age in which you can retire with full benefits. How much have you saved for retirement? This should be the total of all your retirement accounts including 401Ks, IRAs, 403Bs, etc.
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How much will you contribute monthly? This is the amount you add to your retirement savings each month. What do you think your annual return will be? This is the return your investment will generate over time. Find out with Chris Hogan’s free assessment.