Pensions Planning: The NUMBER

crv1963

LULULU1 said:

What a great thread. Still working out our number but thought Id ask if anybody is doing what we are doing.

To me paying off the mortgage is the last thing I want to do as its literally dead money doing that. I know of course everyone is different and we may be way off the mark..

Thanks for any thoughts.......

As you say we're all different, we've cleared the mortgage and it gives a degree of psychological security knowing that it is ours. Working as a team, Mrs CRV wanted the security and I had thought I wanted to have more "cash in the bank", but as you point out your cash in hand can clear it anytime, hence I just bit the bullet and paid it off. We both know if needed we could re-mortgage. It is all about what makes you comfortable as a couple.

Stubod

..from day one of home ownership our priority was to pay off the mortgage, but then the interest rates were north of 10% so perhaps we had more incentive! However equally important to us was we hated the idea of being in any debt, and once paid off gives you the feeling of extra security and the monthly mortgage payments are now yours to do what you like with, money as above once it is paid off it's, but each to their own!

shinytop

When I had the option to pay off the mortgage earlier I was comparing savings and mortgage rates and there wasn't enough in it to persuade me to stay in debt.  I didn't compare pensions/investments. After the mortgage was paid off I diverted the saving to my pension anyway.  It was a really nice feeling to be debt free and, to me, worth paying a bit of money for so no regrets. 

Linton

LULULU1 said:

What a great thread. Still working out our number but thought Id ask if anybody is doing what we are doing.

My wife and I will both have DB pensions so whilst the interest rates are low we are paying much less into our mortgage now and the mortgage will last until Im 80. I will have the cash to pay it off when I retire but I would prefer to keep making lower payments and have more money now and leave more money invested. If rates rise we will just pay it off.

To me paying off the mortgage is the last thing I want to do as its literally dead money doing that. I know of course everyone is different and we may be way off the mark..

Thanks for any thoughts.......

Our situation is somewhat different, but the intention to maximise pension pot flexibility is the same.

After 12 years of retirement on the basis of very cautious assumptions we ended up with more money than we could reasonably use.  So what we did is to significantly trade up our home, both in size and location, half financed by a lifetime I/O mortgage.  My intention is to switch the mortgage to roll-up as soon as this becomes viable. 

cfw1994

Linton said:

LULULU1 said:

What a great thread. Still working out our number but thought Id ask if anybody is doing what we are doing.

My wife and I will both have DB pensions so whilst the interest rates are low we are paying much less into our mortgage now and the mortgage will last until Im 80. I will have the cash to pay it off when I retire but I would prefer to keep making lower payments and have more money now and leave more money invested. If rates rise we will just pay it off.

To me paying off the mortgage is the last thing I want to do as its literally dead money doing that. I know of course everyone is different and we may be way off the mark..

Thanks for any thoughts.......

Our situation is somewhat different, but the intention to maximise pension pot flexibility is the same.

After 12 years of retirement on the basis of very cautious assumptions we ended up with more money than we could reasonably use.  So what we did is to significantly trade up our home, both in size and location, half financed by a lifetime I/O mortgage.  My intention is to switch the mortgage to roll-up as soon as this becomes viable. 

Trading UP a home in retirement: that is a novelty, well done!   Not heard the term "Lifetime I/O mortgage" before.

To @LULULU1 - we chose to pay off our mortgage, but technically I suspect you are right - might have made more sense to keep the mortgage spinning on. 
That said, money no longer going to that can now go to investments.   Clearly no-one knows the future, but broadly speaking, our "other equity investments" have gained more than the mortgage rates over the years.
"Losing" the mortgage millstone is, however, most definitely a big psychological "achievement/win" - in my view.
I can see an argument for some people to take a "low interest" mortgage before retiring (whilst it is easier to get) - that might perhaps be a cheaper form of "equity release" for them?   I would not be interested in that for us.

saucer

We've sacrificed mortgage repayments in favour of putting more into pensions.  That being said it comes with the safety net of two strong public sector DB pensions, and an investment property.  We have a flexible mortgage and it seemed more sensible to us to pay the interest off and get the added tax saving going in that the pension contributions give.  I can completely understand however people wanting to get rid of that big debt.   

Anonymous101

I agree its a very personal decision. We've taken the approach that whilst we intend on working we are happy to pay a mortgage but we would like to have it paid off once we intend on finishing our primary careers. Essentially that means choosing to prioritise investing rather than overpaying.

Our current mortgage is scheduled to run until we are around 60 years of age and we're hoping to be in a position to be Financially Independent a good decade prior to that. If that would be the case then after we become FI but before we scaled back our income we would look to shift priorities to the mortgage and pay it off. I view this as a good hedge against the markets by lowering our committed monthly spend substantially.

woolly_wombat

OH and I watched my parents struggle to pay their mortgage in their sixties after my father became seriously ill and decided that we would do things differently.

saucer

woolly_wombat said:

OH and I watched my parents struggle to pay their mortgage in their sixties after my father became seriously ill and decided that we would do things differently.

I will be doing my very best to avoid that situation.  Our TFLS should comfortably pay off the mortgage and leave some left over, and that is based on early retirement in about 6 years. I don't think I would think the same way if I was relying more on the markets. 

colmel16

looking at this thread with interest it occurs to me many posts see their NUMBER as being 2/3 final salary. 5 years ago my final salary was £30000 which meant £20000 in retirement so i got a job that only paid £20000 so i only need less than £15000 in retirement, seems like good retirement planning to me,