#RetirementPlanning #HomeSelling #EquityInvestment #FinancialAdvice
Hey there! 👋 Sounds like you’ve got some big decisions on your plate when it comes to your retirement savings. Selling your home to put the equity into your retirement fund is definitely a strategy worth considering. Here are some thoughts to consider:
– Selling your home could provide you with a significant cash infusion that could help you “catch up” on your retirement savings.
– With only 145k left on your mortgage at a low 2.5% interest rate, you could potentially save on interest payments by paying it off early.
– Taking advantage of heavily discounted rent through a family business could free up more cash for retirement contributions.
In my opinion, putting the equity from your home sale into your retirement fund could be a smart move to boost your savings. It’s always a good idea to consult with a financial advisor to explore all your options and make an informed decision. What do you all think? Any other suggestions or tips? 🏡💰 #RetirementPlanning #FinancialFreedom
I wouldn’t put it all in Retirement personally, I would either split it between Investments, Retirement, and your general savings – or take that money and either invest in your family’s business or start your own.
There are not enough details on the discounted rent from the family business. It sounds like the family business may be real estate investing. Unless you are a majority owner in the family business, you are relying on others. Family relationships can turn sour and you could be forced out with no place to live and having to pay market rate for rent.
If it’s a family owned real estate investment property, consider renting the property to a third party for market rental rate. Then take the rental income and add to your own investments for retirement. If the family business will give you discounted rental rate, can you get the difference in rental income?
I would think hard before deciding to give up my home, especially with a low interest rate at 2.5%. Do you and your spouse like your current home and the neighborhood?
Owning a home with no mortgage is a huge asset in retirement, decreases the need for retirement income, and can be a big part of financial independence. Lots of people can live a nice retirement with a home paid off and no mortgage with just Social Security and no retirement savings. If you have no mortgage, you can also contribute more to retirement accounts.
If you decide to sell your principal residence, be sure to get a written lease for the discounted rent. Consider negotiating a longer written lease like 5 years. You could add a condition in the lease agreement that the lease is contingent on the sale of your home.
If you contribute 15% per year ($9k) to retirement and get a 6% real return, you could have around $1 million in current dollars in 30 years at age 66. You still have 31 years until your SS full retirement age. Add in Social security and a home with no mortgage, you could have a comfortable retirement.
What would be the variance? (ie. change in situation) 2.5% is a low rate that may not come back for some time yet (if ever). Also, there is a lot of security and peace of mind that comes with a fully paid off house. That said, if you’re currently paying like $2000/month for mortgage and could pay $200/month in “heavily discounted rent”, then that is a variance of 1800/month (or a 90% discount in cost of shelter), which could make a big difference if invested well. Note, personally I would not consider it worth it if the new rent is about the same as the house payment just to have $100k to put in retirement (you also can’t just dump that into a retirement account wholesale, there’s annual limits to personal retirement accounts). One reason people predict their expenses to be lower in retirement is low (or basically “zero”) housing costs due to paid off mortage, if you sell your house, then you’re either forcing yourself to seek out affordable housing later or risking trying to get a new house with high borrowing costs and paying that off longer.
Since you’re married, you also need to make sure your spouse is on board with this plan. (I would like to assume that’s already been discussed, but just in case … This is doubly true if she is also an owner of the property)
If that renting situation doesn’t pan out long term, then you’re kind of back to square one. Mortgage is cheap by today’s standards.
I don’t think you need to “catch up”
You have a rock bottom mortgage… probably will never see that rate again. And less than 150K balance? You’re ahead of the game
With 40K in retirement that is about dead on average (median, actually)… for people your age that even HAVE a retirement account. About 30-40% of mid-30s people have no retirement savings at all.
Money has a way to “disappear” a house is a lot harder to lose if you pay the mortgage. You will always have a need for shelter. Having a discounted rent from family looks good on paper until there is a falling out. I wouldn’t do this.
Can u rent your home? The way home rentals r going, u will b able to rent the house and it will pay for your mortgage and property taxes, plus extra $ every month. then u can organize what u do with that $. Invest, pay bills, etc