[Music] Got a great question to kick us off and talk about this topic from Troy. He says, My dad is set to retire soon but isn't sure he should pay off the house first with 250k left at 2.5%. He wants to keep the money invested. Is there something besides that 2.5% interest rate that he should consider? What do you guys think? So, let me answer the second part of the question first. Is there something to consider other than the interest? Of course, absolutely. When it comes to personal finances, you don't want to ever look at anything in a vacuum, so there are other things to consider. But I like the way the beginning of the question started, Brian. I want to know your answer to this question. Is it okay to retire with a mortgage? Yes or no? Look, the ideal is no. Yes or well, no, but here's the ideal, is that you want to retire debt-free 'cause it's hard to say you are financially independent while you're sitting there walking around with an

obligation, but that's one of those things in theory or on paper that is the ideal, but we all know, and this is where the personal finance comes in, it depends. And Troy did give us some context there. I will tell you that 2 and a half%. I resemble that. I'm struggling with that. But now the difference between me and Troy's father, though, is that I'm not actually trying to say I'm retired. I'm far from that. But um, I will tell you this is not one that would freak me out. We'd still need some additional context or, or, or, you know, context in the fact of, I don't know, is 250 a small part of Troy's father's net worth? I don't know if what the mortgage payment is in relationship to what Troy's father's cash flow or expenses are in retirement. All these things matter. But definitely the 22% will have an impact 'cause we'll try to figure out from an incremental decision-making what's the next thing to do with your, your, your

next dollar and but I I I would need a little bit more information but ultimately I don't I don't I'm not panicked about the 250 at 2 and a half% but I also don't want somebody like going and taking a new mortgage out at 6 or 7% at retirement. That would freak me out as well. Yeah, I mean, let's think about this. Let's say that Troy's father is at Financial Independence and he has a couple of million dollars saved up. If all of that money were in retirement accounts or in 401ks and Ira and pre-tax accounts, would Our advice be, Hey, what you need to do is you need to take a giant distribution, the $250,000 plus the taxes, and do that to then go satisfy that mortgage? I don't think that that would be incredibly prudent. You're going to have a huge tax bill to do that. So, one of the things that I always like to say is that being debt-free in retirement is awesome, but in my opinion

You know what's just as cool as being debt-free? Having the ability to be debt-free. Because even if Troy's dad has a couple million dollars and he's financially independent, and even if a lot of it is after tax right now where we exist in our present state, he's got a 2 and a half percent mortgage and money just sitting in a savings account. Just sitting in a high-yield account right now can make 5%. So I don't think if that's the circumstance that Troy's dad is in. I think if you have the ability to write a check to pay off the mortgage, in my mind, that counts as unencumbered even though that mortgage still exists. Well, but I think it's also intent of the plan. If there's a big difference if Troy's father was going out and this is the point I was trying to make earlier and was about to approach retirement, but he also knew he had to relocate to a different part of the country or he was

you know buying his retirement home somewhere else. I don't know that I love somebody starting a brand new 15 or 30-year mortgage right as you're at retirement 'cause that seems very encumbering to me. However, somebody who's seven or eight years into a 15-year mortgage, and it just so happens that their retirement plan has this 2.5% mortgage at $250,000, and it's a small percentage of their cash flow. When you're trying to, when I do a financial plan, and I'm trying to figure out, does it make sense to extinguish that immediately, or should we do something maybe that's a little more dynamic? Because think about this: while the Federal Reserve is not going to keep interest rates this high forever, so while there's this arbitrage situation that you mentioned where you can make 5% of your cash versus the 2.5%, okay, let's not prepay it super fast because it's a short part of the plan, but then as soon as the

crossover Point occurs where now you're paying more in interest. The 2 and a half % that you make on your cash will accelerate paying it back, but it's all within this small plan, this time period of time. That's the big part of this, is what's the intent, what's the plan, how does it fit into your cash flow. And I, but I don't want people having debt in retirement, but I also am not going to say pay it off yesterday when maybe your plan has you pay it off in the first 3 to 5 years of retirement. Love it.

My Dad Is Retiring and Doesn’t Want to Pay Off His $250,000 Mortgage

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