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Retirement

Joe Public said:
Took my first step towards early retirement yesterday by paying off my mortgage.
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Good stuff
it's hard I think ,spending a big chunk of money on early settlement . You're used to the payments etc and money In the bank is nice but it's for the best in the long run 😄
I put the mortgage payment into savings every month otherwise it just gets used .
Ned Land said:
You are right but it depends on timeframes. E.g. if you are mortgage free and have e.g. £500 per month extra for 5 years then the stock market could be risky.

Cash can lose its purchasing power to inflation.

Gold, bitcoin????

It’s obviously still a great position to be in and there is some security.

We will have a mortgage remaining when I retire but the rate is low and I should be able to clear it with lump sums. If anything the council tax bill and house maintenance costs is more of a hindrance.

The biggest bill is wife/kids :lol:
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Can't help who you fall for but one who earns as much as you is handy
 
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JAZZMANB said:
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I put the mortgage payment into savings every month otherwise it just gets used .

Can't help who you fall for but one who earns as much as you is handy
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You are losing money unless the savings rate is higher than inflation.

Yes, a rich younger wife is the best result :cool:
 
JAZZMANB said:
Where ? Paying a mortgage instead of paying it off . Of course but everyone does it every month to a point ,spare cash gets spent or saved ,rarely paid off mortgage balance. Some people are happy with a manageable payment each month and like a cash in bank cushion
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Yes but it’s more nuanced than that. You can have too much cash. If your mortgage is paid off then you could of course save cash for 5, 10 years but it isn’t the best use of that money imho.

I’m trying to make you aware that there are different strategies other than paying off a mortgage ASAP. I recognise that there’s an emotional and security factor, but it isn’t *always* the optimal financial choice.
 
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Ned Land said:
Yes but it’s more nuanced than that. You can have too much cash. If your mortgage is paid off then you could of course save cash for 5, 10 years but it isn’t the best use of that money imho.

I’m trying to make you aware that there are different strategies other than paying off a mortgage ASAP. I recognise that there’s an emotional and security factor, but it isn’t *always* the optimal financial choice.
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Thanks but I was merely saying it's a wrench to people to get a nice lump and flatten the mortgage with it . Not really talking about more detailed financial plans which as you say is all opinions and maybes
 
JAZZMANB said:
Thanks but I was merely saying it's a wrench to people to get a nice lump and flatten the mortgage with it . Not really talking about more detailed financial plans which as you say is all opinions and maybes
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It isn’t for me, it will be the endpoint of a 15 year plan.
 
55 next year so will have to do something with a tax free lump sum.
No idea how long I'll continue to work but I don't enjoy the job like I used to.
Three more years on the mortgage so I'll be around for that at least.
 
Ned Land said:
Yes but it’s more nuanced than that. You can have too much cash. If your mortgage is paid off then you could of course save cash for 5, 10 years but it isn’t the best use of that money imho.

I’m trying to make you aware that there are different strategies other than paying off a mortgage ASAP. I recognise that there’s an emotional and security factor, but it isn’t *always* the optimal financial choice.
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Yes but surely paying off a mortgage that has say 4.5% interest is better than putting in a savings account on 3%
 
Chop Sauce said:
Yes but surely paying off a mortgage that has say 4.5% interest is better than putting in a savings account on 3%
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Yes that’s why it’s nuanced. If mortgage is e.g. 2.5% then stock market returns usually exceed that over the longer term. Which is what I gambled on.
 
Ned Land said:
You are right but it depends on timeframes. E.g. if you are mortgage free and have e.g. £500 per month extra for 5 years then the stock market could be risky.

Cash can lose its purchasing power to inflation.

Gold, bitcoin????

It’s obviously still a great position to be in and there is some security.

We will have a mortgage remaining when I retire but the rate is low and I should be able to clear it with lump sums. If anything the council tax bill and house maintenance costs is more of a hindrance.

The biggest bill is wife/kids :lol:
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Paying my 2 kids university accommodation is our biggest bill.
tenpins said:
55 next year so will have to do something with a tax free lump sum.
No idea how long I'll continue to work but I don't enjoy the job like I used to.
Three more years on the mortgage so I'll be around for that at least.
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Pretty much my situation although my work was bought out 18 months ago and were starting to migrate our systems to theirs so hoping for redundancy middle of next year.
 
Ned Land said:
Yes that’s why it’s nuanced. If mortgage is e.g. 2.5% then stock market returns usually exceed that over the longer term. Which is what I gambled on.
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Yep understood. Not many mortgages at 2.5% mind. My mortgage is up for renewal end of October from an old fixed rate and paying it off would seem the best option given rates offered 4%+
 
Chop Sauce said:
Yep understood. Not many mortgages at 2.5% mind. My mortgage is up for renewal end of October from an old fixed rate and paying it off would seem the best option given rates offered 4%+
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Yes that would make sense and I’ve done that in the past.

My point was that although it’s great to pay off a mortgage ASAP, that in some situations you can be better off in the long run by being more adventurous/risky.

It depends how comfortable you are and what your aims are. I’m making use of tax-free AVCs as part of a pension to build a lump sum. It’s essentially free money so I might as well take it.
 
The mortgage thing was always a head scratcher when you had fixed rates of 2% and interest rates of 4%.
Working it out it was better to pay your mortgage rather than pay it off as it was cheaper, technically to carry on paying the mortgage over the long term.
At the moment with a mortgage rate being 4/4.5 and you can get ISA rates of around 4% it's more or less the same.
Add to the fact that getting rid of the £500+ monthly payment is a giant millstone off your back is much more relaxing.
You then have the choice of what to do with the extra money. Keep it, save it, keep some and invest some, buy a nice new car save it for home improvement stuff and the like.
It gives you some financial freedom.

Of course you have to appreciate it is part of your tax free allowance if you're using that. Too many people I know see the 25% as a tax free "lumper" like some sort of windfall. I prefer to look at it as not paying tax on pension income for as long as possible.
You get around £1040 a month that you can receive tax free, but if you want £2000 a month, then you going to have to pay £200 in tax each month if you take that, so you'd only get £1800. So a £30k lump sum could mean you don't have to pay tax for 2 1/2 years whilst still getting your £2000 a month and paying no tax.

Of course this is all dependent on the missus finding out you have £30k sitting in the bank and prefers a new kitchen and a family trip to Disney.
 
a1970man said:
The mortgage thing was always a head scratcher when you had fixed rates of 2% and interest rates of 4%.
Working it out it was better to pay your mortgage rather than pay it off as it was cheaper, technically to carry on paying the mortgage over the long term.
At the moment with a mortgage rate being 4/4.5 and you can get ISA rates of around 4% it's more or less the same.
Add to the fact that getting rid of the £500+ monthly payment is a giant millstone off your back is much more relaxing.
You then have the choice of what to do with the extra money. Keep it, save it, keep some and invest some, buy a nice new car save it for home improvement stuff and the like.
It gives you some financial freedom.

Of course you have to appreciate it is part of your tax free allowance if you're using that. Too many people I know see the 25% as a tax free "lumper" like some sort of windfall. I prefer to look at it as not paying tax on pension income for as long as possible.
You get around £1040 a month that you can receive tax free, but if you want £2000 a month, then you going to have to pay £200 in tax each month if you take that, so you'd only get £1800. So a £30k lump sum could mean you don't have to pay tax for 2 1/2 years whilst still getting your £2000 a month and paying no tax.

Of course this is all dependent on the missus finding out you have £30k sitting in the bank and prefers a new kitchen and a family trip to Disney.
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Think paying off the mortgage is more of an emotional decision than a financial one.
 
a1970man said:
Of course you have to appreciate it is part of your tax free allowance if you're using that. Too many people I know see the 25% as a tax free "lumper" like some sort of windfall. I prefer to look at it as not paying tax on pension income for as long as possible.
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You've confused me on this bit
Using what ? You were talking mortgages .. Are you saying you pay more tax on your normal income tax when you release your 25% lump ?
 
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