Pulaski

Cash is king - there is an argument* that going into retirement you might as well have a large mortgage as you won't live long enough to pay it off and you have the cash/savings to spend as you please. Obviously it means that ultimately the house will get sold to pay off the mortgage, but if you're dead or doolally and in a home, either way you won't care.

* I don't necessarily agree with that and expect my mortgage to be paid off within 3 years.

vespucci

Apart from what's been mentioned, maybe they wanted to avoid high tax rates taking a lot of money out of traditional retirement accounts in one year.

Steerpike

If you are doolally and in a home, I would think that might be expensive ... though if you are totally doolally you may not care about the quality. Personally, I'm hoping I can afford something not quite at the bottom of the ladder! Though my retirement predictions go to hell if I start assuming any substantial time in a care home due to something like Alzheimers ... a good friend's mom is in a care home and the numbers are staggering. I think I'd survive 5 years only; her mum has been in for 10 years now; a slow and difficult demise ...

Good point! There's also the issue of "RMD" which I recently learned about - required minimum distributions. Even if you don't 'need' the money, you must take out a certain amount from your IRA/401K once you reach 70, and I was surprised to see that I think I'll be impacted by that (thanks to Social Security and some after-tax savings).

I guess I can always take out a mortgage 'after the fact' if it would be attractive at some time in the future.

tom169

Hopefully ones legacy would expand beyond the "crazy guy in crippling debt" to "he managed money well, but in the end was totally crazy."

Personally I prefer the safety of a paid off mortgage and so that's what we are working on.

Sure we can all get higher than 4% even on a basic index fund, but I think most are lying that they actually do it. The extra money that could get thrown at principal is probably spent on junk and not the investments mentioned.
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Also somewhere way up I heard about having a mortgage for a tax write off. That's totally flawed and is on the same thought process as being happy with a tax return of $10k.

"Yay I'll send the bank thousands a year in interest so I don't have to sent the IRS hundreds."

MidAtlantic

There is no problem with a cash ISA. It will be taxed in the US just like any other savings account.

Pulaski

I can't agree more with this - saving $300 on your taxes by paying $1,000 to the mortgage lender is just plain daft!

Rete

This only starts when you are 70-1/2 years old. So you have several years before you have to worry about that. I simply roll it over to a private investment account where it still earns a decent percentage so there is no loss there. In addition, the investment company withholds taxes, both state and federal, so I'm not bothered much by the withdrawal.

Isn't the purpose of the IRA account so that it can be used in your retirement years. What are you holding on to it for after the age of 70-1/2? Travel or improve your lifestyle with the funds you need to withdraw. For yourself, you have no children so who is going to be the beneficiary of the retirement savings? Why shouldn't you be the recipient of the funds. As for the taxes, you weren't taxed on those monies when you put them away and while they were increasing so you pay the taxman now.

I know that sis and bil 'earn' more now from their RMD and social security then bil made annually. When they kick the bucket their kids and grandkids will get the leftovers. Not that they haven't enjoyed those funds recently. Mom and dad paid off the law school student loans for one kid and gave the other 50K as a down payment for a new home build.

I refused to pay for our house in full. The mortgage was 2.25% and we pay no real estate taxes. It didn't make sense to pay for the house in cash when the mortgage is only 15 years and already 1/3 paid off.

durham_lad

Octang Frye

Congratulations! Wish you every happiness,