$ predictions and investment opinions

[Slippy]

Querstion;

When one retires--

Is it better to have Less Money in Retirement Accounts and Zero Debt?

Or

More Money In Retirement Accounts and "Manageable Debt"?

[Chiefster23]

Querstion;

When one retires--

Is it better to have Less Money in Retirement Accounts and Zero Debt?

Or

More Money In Retirement Accounts and "Manageable Debt"?

1. Is the income from your existing retirement accounts EASILY covering your debt payments? (Probably yes).
2. Are you comfortable with the debt? Or would you be more comfortable being debt free.
3. If you loot your retirement funds, will your remaining income still meet your needs with a comfortable cushion?

Personally I like debt free. Ideally it would be great to be debt free before retirement.

[T-Man 1066]

Querstion;

When one retires--

Is it better to have Less Money in Retirement Accounts and Zero Debt?

Or

More Money In Retirement Accounts and "Manageable Debt"?

To answer that, you need to look at your financial lifestyle. Do you want to travel alot in retirement? Maintain a McMansion and a second property somewhere else?

Maybe downsize, buy a mini-home?

I think the right answer is to have enough passive income to maintain. Whether that means alot of pension, dividend checks, retirement interest to get by without having to tap into the principal? Living in a low cost-of-living area will stretch that budget as well.

But either way Slippy, both answers would work as long as you aren't going to outlive your money.

[~MG~]

Querstion;

When one retires--

Is it better to have Less Money in Retirement Accounts and Zero Debt?

Or

More Money In Retirement Accounts and "Manageable Debt"?

Okay, I'm confused.
If you have an option, i.e., no mortgage, etc., why would you have any Debt at all?? Math alone points against that. What am I missing here?

[T-Man 1066]

If the mortgage was a 3.5% deal, but the retirement interest was rolling 6 or 7%, then yea, it would make sense to have the debt.

[~MG~]

If the mortgage was a 3.5% deal, but the retirement interest was rolling 6 or 7%, then yea, it would make sense to have the debt.

Which is why I left "mortgage" out of my question. But even then, that would depend on the amounts in each category. If yer flush enough - pay off the mortgage and put those mortgage payments into the 6 or 7% growth. No?

[Slippy]

Okay, I'm confused.
If you have an option, i.e., no mortgage, etc., why would you have any Debt at all?? Math alone points against that. What am I missing here?

MG

I'm a couple of years from "retirement". Maybe 3 if I can stand it that long.

Is it better to pull money from Roth accounts to build a barn (with 1bed/1bath) or take out a loan this close to retirement?

[stevekozak]

Querstion;

When one retires--

Is it better to have Less Money in Retirement Accounts and Zero Debt?

Or

More Money In Retirement Accounts and "Manageable Debt"?

I am not yet retired but I can tell you that it is better to be debt free than to have higher retirement accounts. What are you going to do with the money if you still have debts. Answer: spend it on the debts. Better to be debt free and letting the money you have earn more money instead of going to pay debt. I will be zero debt when I pull the pin. the only debt I have now is my mortgage, and I am aggressively paying that off.

[stevekozak]

If the mortgage was a 3.5% deal, but the retirement interest was rolling 6 or 7%, then yea, it would make sense to have the debt.

No. That might be what straight math says but you are not factoring in the RISK that comes with debt. Debt free is the way to be.

[stevekozak]

MG

I'm a couple of years from "retirement". Maybe 3 if I can stand it that long.

Is it better to pull money from Roth accounts to build a barn (with 1bed/1bath) or take out a loan this close to retirement?

Slippy,
OVer the years, I gather you make a comfortable living. Maybe your strategy is to start stacking the cash up to fund the barndeminium , (partially by not adding to the Roth) and not have to take the existing funds out of your Roth. But, of the two options you offer, I would go with taking the necessary money from your Roth (which you can do penalty free) to do your project. Cash-flowing it would be preferable, though. YMMV

[T-Man 1066]

Steve and MG, upon further review, I do agree. I ask the court to strike my previous comment from the record.

[~MG~]

MG

I'm a couple of years from "retirement". Maybe 3 if I can stand it that long.

Is it better to pull money from Roth accounts to build a barn (with 1bed/1bath) or take out a loan this close to retirement?

For me, as long as there were no unmanageable tax implications re pulling money out, I'd avoid the mortgage debt hands down. Not only for the reason of staying debt free, but for the extra cost and control I'd be required to give insurance providers. Especially if I was close to retirement.

[Slippy]

Slippy,
OVer the years, I gather you make a comfortable living. Maybe your strategy is to start stacking the cash up to fund the barndeminium , (partially by not adding to the Roth) and not have to take the existing funds out of your Roth. But, of the two options you offer, I would go with taking the necessary money from your Roth (which you can do penalty free) to do your project. Cash-flowing it would be preferable, though. YMMV

Yes, that is where I'm leaning now. Roth withdrawal.

Cash flowing the job will take longer and we would like to have a more comfortable and permanent place to lay our head on our land vs staying in our camper.

Yoda would say about me--"Slippy, spoiled little bitch you are!"

[Slippy]

For me, as long as there were no unmanageable tax implications re pulling money out, I'd avoid the mortgage debt hands down. Not only for the reason of staying debt free, but for the extra cost and control I'd be required to give insurance providers. Especially if I was close to retirement.

Excellent point about the "control factor". Thanks MG!

Side note; Building Permits and dealing with the county, state and local governments has ramped up tremendously since we built Slippy Lodge many years ago. Unbelievable the shit-hoops we have had to jump through so far...

[~MG~]

Our county here in Texas doesn't worry about permits, heh, and there is no local government. Only "regulator" is for water... and if you buy land with a well already on it , you're good to go.

[Chiefster23]

Slippy! Depending on how your IRA is invested, the value can go up and also down. In today’s world I’d be very concerned about it going down, big time. Once you own your new property, debt free, you don’t have to worry about values and withdrawals. (Just property taxes). Sit back. Sip your tequila. And not worry about the markets. I vote debt free! But just be warned, I’ve pulled a couple of bone headed moves with my finances so take my advice with a big dose of skepticism.😵💫