"Baby Boomers Accelerate Their Advance into Free-and-Clear Homeownership," Page 2. Over the past several years, research has shown that the majority of people are not saving enough for retirement. I used to be the Money & Investing Editor at Forbes. A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Again, this works best for those who have a well-funded retirement account and are still left with substantial savings for unexpected expenses and emergencies. If you are absolutely committed to paying off your mortgage then consider doing it over a period of time rather than making one lump sum payment. If you intend to use retirement funds from traditional 401(k)s or IRAs to make another 10 years of mortgage payments in retirement … This scenario is no longer the norm: Baby Boomers, Americans born between 1946 and 1965, are carrying more mortgage debt than earlier generations at this life stage and are less likely than generations before to own their homes at retirement age, according to research from Fannie Mae's Economic and Strategic Research Group.. So, every marginal dollar you withdraw gets taxed at the maximum rate. Sometimes that involves. That is not a wise financial move. In 2011, I wrote a book, TAMING THE BEAST, which is excerpted on this site. Accessed Apr. Four of five non-retirees with a mortgage expect to pay it off before retirement, according to a new survey from Voya Financial, but the experience of current retirees suggests some of those … Stephen Nelson: No, unfortunately. Sometimes that involves steering clear of bad if enticing investment ideas. Remember, a mortgage new or old is a liability to your household, subtracted from a household’s assets. This means using personal income tax allowances in the most efficient way and drip feeding the tax free lump sum- via phased drawdown- to provide tax free income over several years. Nelson: You do everything at once. Good investing ideas, often contrarian, constitute my brief, here at Forbes.com. Instead, think of paying off your mortgage as similar to making an investment in fixed income investments. Good investing ideas, often contrarian, constitute my brief, here at Forbes.com. Paying off a mortgage ahead of retirement also makes sense if monthly payments will be too high to afford on a reduced fixed income. But with a little tax planning and a strategy utilizing Roth conversions, you can save yourself a huge tax bill and pay off your home. Due to our progressive tax system, money is first converted at the lowest rates possible. The conversion throws you from the lowest tax bracket up into the highest tax bracket, which is 37%. Using retirement account funds to pay off (or pay down) a mortgage balance depends on personal facts and circumstances. We have $190,000 in retirement savings and want to use the COVID-related distribution rules to pay off $40,000 in debt — should we? A. You would net $700,000 that could be used to pay off your mortgage. If you withdraw before you turn 59½, you both incur taxes and early-payment penalties. Even if you wait, the tax hit of taking a large distribution from a retirement plan could potentially push you into a higher tax bracket for the year. Internal Revenue Service. 21, 2020. So you can do anything with the money that you wish, like using it to pay off your mortgage. 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