I will soon make our final mortgage payment. My wife
will retire in two years and I will work to age 67. We
are both 60 today. Because I donít get a pension I
really have been looking forward to this final payment.
We bought the house 25 years ago, but I shortened the
term of the loan by refinancing to a 15-year loan in
2003. Are we doing well to have the mortgage paid off by
age 60? óT.M.
Paying off a mortgage before retirement is sort of the
baseball-and-apple-pie of retirement. Itís a feel-good
way to create a sense of security in your later years.
Of course, without knowing the details itís tough to
determine if youíre doing well in the larger sense.
Assuming your previous mortgage was a 30-year loan, you
knocked off five years of interest payments and
presumably the 15-year loan was at a much lower interest
rate because rates in general declined substantially in
that decade. Plus, rates for 15-year loans are lower
than those for longer terms. But did you take a bunch of
cash out in the refinance or pay a lot in closing costs?
Was the cost of the house itself more than you should
have spent given your income?
broadly, how does the rest of your retirement picture
look? Plowing that mortgage payment into extra
retirement savings now will certainly help over the next
several years. But did the higher house payment for the
15-year loan result in you not saving much in retirement
accounts? That money could have been compounding all
these years. Second-guessing your decisions probably isnít
in your best interest, so perhaps the best strategy is
to enjoy the freedom of being done with those payments,
but make the most of that new cash flow now.
I applied for both survivor and work-related benefits
simultaneously and realize now I probably shouldnít
have, based on your column about survivors being
shortchanged on their Social Security benefits. Iíd
like to hear if there is anything I can do. óB.F.
Hereís one possibility: If someone applies for
benefits and realizes it was a mistake to do so, the
application can be withdrawn if done within 12 months of
the original application. To do this, all benefits
received have to be paid back to the Social Security
Administration and the benefit is re-calculated when the
person chooses to file again.
we learned in a follow-up note that this reader was well
beyond the first year of payments, so that is not an
option. Weíd still like to hear from survivors who
were misinformed about their benefit choices and may
explore in a future column the extent of those foregone
benefits and what strategies financial experts recommend
in order to make up for the shortfall.
Iím following up on a column about changes in 2015 to
Social Security claiming rules. Iím divorced and my
birthdate was in 1954. My former spouse was born in
1953. Can I still take one benefit at full retirement
age and switch to the other at age 70? óR.O.
This option was eliminated for people born on or after
January 2, 1954. So, assuming he or she meets the other
eligibility requirements, it looks as though your ex
would be able to file for just a spousal benefit at full
retirement age and switch to work-based benefits at age
70 to collect delayed retirement credits. No such luck
for you. Be aware, however, that you may qualify for
survivor benefits when your ex dies, if those would be
higher than your own, so keep that in mind as you decide
on your strategy. Check out this link from the Social
Security Administration: https://www.ssa.gov/planners/retire/divspouse.html.