The Truth About Retiring With A Mortgage

Should you retire with a mortgage? There are benefits but also risks if you do. Having a mortgage maintains your current cash flow rather than taking a lump sum out of your RRSP and triggering a big tax bill, however as we see right now, a rising interest rate market can definitely bring stress to those with mortgages in retirement. If you do end up carrying a mortgage in retirement, make sure you have a very clear retirement and financial plan in place to give you piece of mind.

Financial Resources I personally recommend:

OUTLINE
0:00 - Mortgage In Retirement
0:37 - Benefit 1: Cash Flow
1:26 - Benefit 2: Rate Spread
2:10 - Benefit 3: Property Value
3:50 - Risk 1: Rising Rates
4:33 - Risk 2: Limited Options
5:11 Risk 3: Market Risk
6:15 - My Thoughts

This presentation is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter. Every effort has been made to ensure the accuracy of its contents. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Returns are not guaranteed and past performance may not be repeated.
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DISCLAIMER: The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adam Bornn is not registered to provide investment advice and as such does not provide recommendations - those looking for investment advice should seek out a registered professional. Adam is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades.

#retirement

[jovicrazed]

Although I didn't have a mortgage but had a HELOC, as of two weeks ago, I don't owe a single cent to anyone. It feels pretty darn good.

[edisonareis]

I leveraged 20% of our house (HELOC) 7 years ago to buy 3 rental properties so I am not worried about having a mortgage as the rental cash flow more than cover the house mortgage plus all 4 assets appreciated much more over the years instead having our house paid out. (and having the rental mortgages being paid out month by month is magical)
Debt isn’t bad as long it is a “good debt”.
Great video buddy

[terrygelinas]

Agree - getting older and past 60, it's nice to simplify your life and pay off the remaining mortgage balance. Less stress, better mental health, and you check off a milestone checkbox.

[philippelarocque]

Adam, I’m a CPA and I love your advice. The emphasis on cash flow is on point. I often see clients underestimating this element and the impact on their happiness. Great video!

[gruff]

Outstanding video Adam. The closer you can get to replacing your NET income in retirement, the easier it will be to carry a mortgage or other forms of debt. If you can only replace 40-50% of your net income in retirement, then having a mortgage is not advisable as you will be extremely tight with cash flow. If however, you can replace 80-100%+ of your net income in retirement then debt is largely irrelevant. If you can afford the payments working then you can afford the payments retired if income is the same. It just takes a plan.
Also, retirement income can often be more secure then working income depending on the source.

[sheriewelsford]

I so love your videos...thanks for providing this service.

I am looking at selling and then downsize, but right now I still have a small mortgage. I'm about 4 years' left until I retire at 65...hopefully fingers crossed.... 🤞

I have a detached house, with a small mortgage. When I look at what is available...I live on the Vancouver Island, Greater Victoria Area btw...there isn't much I can afford if I sell out, pay off the mortgage and buy with cash, even though I have over 60% equity in my home. The most affordable is small condos, but they have strata fees that are more way more expensive than my small mortgage payment. If I downsize, the only thing I can afford to buy outright has a strata fee more than my current mortgage. So is it worth selling and paying that strata fee or just staying put and just paying the mortgage into my retirement? And can people renew a mortgage when retired? Would they be approved?

How do I win at this?

Thanks...

[winniethepoohandeeyore]

Bought my house in 21 using an SSDI income, overpay the principal every month ever since the first payment was due, knocked years off the life of the mortgage so far.

[RetrieverTrainingAlone]

We are retired with the house paid off. This summer we are selling the house for $300k, moving to a more expensive location where houses are $400k. The choice is to take $100k from retirement or get a mortgage for $100k. It is a difficult choice to figure out. Withdrawl from retirement means an increase in federal income tax bracket from 12% to 24% and retirement fund growth at least 4% per year. So would it be better to take out a $100k mortgage and pay off from retirement and stay in the 12% tax bracket?

[Wetcoaster]

I have a home with a rental suite. I’m thinking of downsizing, but wondering if I pay capital gains on the sale of my current income generating home.

[lauraw.]

Thx Adam, another great vid! A few thoughts: some of us (single parents for ex) simply cannot pay off mortgage prior to retirement- I couldnt even purchase a home until much later in life … on the planning piece of carrying mortgage into retirement, I have included it in my DIY retirement plan (very detailed since I luv a good spreadsheet ! 😂) as an expense that I must have sufficient net monthly income to cover - other than possible borrowing rate revisions in years ahead (in the meantime, making double up payments regularly + net income has a built in ‘cushion’), is there a downside to this approach?
Thx🎉 and happy Friday

[Coyotehello]

Hi Adam, How about getting into retirement and looking at getting a mortgage?
I am 61 and I am thinking of buying a piece of land on a BC island.
Of course I will never pay the mortgage in full, I will die first.
I like the idea of having a small piece of land to play with.
I/we have little money invested for retirement but are coming into a little money from inheritance...

[ll_distribution]

Nice Video. Thanks, You must have A Financial plan but finance economic changes ..who can say their life plan went 100%! Plan B and C today.

[Gengingen]

The problem with competing investments earning at a rate equal or more than the mortgage rate are 2 factors: the term of the investment such as GIC is probably lower & the rates that can be received on maturity in the future of the GIC is lower. A 3rd factor is that GIC’s compound yearly but fixed-rate mortgages compound 1/2 yearly. Also mortgage payments are about rate payment on the residual. One is essentially paying interest on (almost) non-reducing principal year after year based upon it’s size even say doubling payment every instalment. This is what generates huge fees for the lender over time. If possible reducing balance in lump sum chunks towards the beginning of the mortgage will save by reducing amortization-term & consequently total interest paid, if you overall cash-flow can be maintained. Taken to its limits, buying outright with cash is the best option of course provided one has no better use for that cash elsewhere. Not many are faced with such a “conundrum” thankfully 😊

[caperboy]

I’ll owe a bit for a few years but it’s being included in my plan.

[joldc]

What is the mortgage is on a rental property, would you also advise to pay it off quickly (we just retired) and have enough income even if tenants didn’t pay for a while) thank you

[MrSteeJans]

Hi Adam, I just wanted to get clarification: you mentioned you don’t want to use your RRSP to pay down the mortgage, because of the big tax hit.
Did you mean - cash in your RRSP to pay off the mortgage all at once ?

My plan (hope) is to use my RRSP to pay my mortgage, but over a regular payment schedule, with the theory that the total amount paid per year will still keep me in the bottom tax bracket.
The idea being my RRSP payments to the mortgage will be my only income.
Our living expenses will be covered by my spouse’s pension.
Does this sound viable ?

[glockmanc]

Why not just pay 2 or 3 times your normal payment to pay it off faster without destroying your cash flow?

[marcello]

What is better to have in your view a Equity home loan or a traditional mortgage for income properties? Thanks great video s

[magimichel]

I retired 2018 with a mortgage of 200k fixed rate, I am now 72. If we payoff the mortgage, does this reduce the governments payment of OAS and GI.?

[murraytown]

I’m old school. Pay off the dang mortgage before retirement. I paid my mortgage off 6 years before retiring. Am retired at 58 and completely debt free. Out of control inflation and tanking investments are about as much stress as I care to deal with in retirement.