At The Eastman Law Firm, we work hand in hand with a variety of financial planners. We make sure that the legacy planning that we create for our clients will meet their needs. This can sometimes be difficult as some of our clients have certain ideas that are stuck in their heads – even though they aren’t true. Below is an article on some of those myths that can truly affect how a person deals with their life both before and after retiring.
See the full article here at http://www.kansascity.com/news/business/personal-finance/article23659438.html#emlnl=Midday_Business_Report
Sometimes the rules don’t apply. Here’s a rundown of four typical rules for retirees which deserve a second look.
▪ Should you pay off your mortgage before you retire?
It depends. If your interest rate on a fixed mortgage is high, say 6% or more, probably. If it’s low, say 3%, maybe not. Are you able to deduct the interest expense? That favors keeping the mortgage. If not, that might favor paying it off. Is your mortgage nearing the end of life, where the interest expense amount is very low? If so, that deduction is worth little. Are your itemized deductions clipped back due to the Pease limitation, so you’re not getting much from the interest expense deduction anyway? If the cash to payoff the mortgage will come from an IRA, where every dollar withdrawn is taxed, that may increase your taxes and marginal tax rate – a bad thing. Do you have a variable rate mortgage? That favors paying it off now, before rates rise. Some seniors worry about carrying a mortgage into retirement. If that’s you, consider paying it off.