Asked by Dave  |  Submitted September 18, 2014

I'm soon to be 68..the spouse is 61.. What should our plan be vis a vis having a mortgage?

We both operate small businesses..with a combined income of ~ $75K / year..on which we make estimated tax payments. I have current SS and pension income of $2500/mo. We have ~ $2.2M in retirement accounts..with 89% of it in IRA accounts... We own a home in the foothills of the Rky Mtns worth ~ $520K with a mortgage balance of $176K .. The spouse's SS won't be much as she never worked FT during our child raising years. Our family & grandchildren are an hour away...we'd like to move closer..but the closer one gets to Denver the higher the cost of real estate..!!! We don't want to be house poor... would actually like to reduce our living expenses and home maintenance responsibilities.. If we relocate...we'll no doubt have to spend more on a home...even when downsizing..should we continue to have a mortage of the same size or even larger..or reduce it by taking $200K or less from savings..??

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  Answers  |  2

September 18, 2014

Dave,
It looks like you will have enough income in retirement to cover a new mortgage. The mortgage will provide some deductions for tax purposes. You will have to begin taking a taxable required minimum distribution from your IRA soon and if you start it now it will create the income needed to pay the new mortgage. The increased taxable income from the IRA distribution can be offset by the mortgage.
That being said, the financials are not as important as your relationships. Move closer and start spoiling the grandkids. Watch the investment allocation on your IRA, the portion that you may have in bonds should be looked at for some alternatives.

$commenter.renderDisplayableName() | 11.20.17 @ 21:23

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June 14, 2016

Hi Dave. Depending on whether or not you intend to include your home for estate planning purposes, you and your wife are near the qualifying age to consider leveraging a Home Equity Conversion Mortgage (aka. reverse mortgage) for a purchase. This would potentially allow you to take the proceeds from the sale of your house (~$344,00) and buy up to $675,000 with no mortgage payments moving forward. You would still be responsible for property taxes and homeowners insurance. This would substantially lighten your monthly housing obligation and allow you to enjoy your retirement years closer to your grand kids. If you desire more information, seek out a local reverse mortgage specialist and talk with your financial advisor.

$commenter.renderDisplayableName() | 11.20.17 @ 21:23

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