Advice for boomers: Pay off your house
It's safer than investing in the markets, blogger says.
What's the best route as you near retirement: Use extra money to pay off the mortgage or pad your investments? That question deserves a new look in light of the recession, argues Mr. GoTo, a baby boomer and blogger who comes down on the side of paying off the house.
The No. 1 reason: A guaranteed rate of return of 6% (or whatever your mortgage rate is) tax-free. "Compare that to what we have experienced in the markets recently," Mr. GoTo says.
- Bing: What's your home worth?
No doubt the big debate has been revived in many baby boomer homes as nest eggs take a beating on the stock market. Mr. GoTo says it's a winning proposition to invest in your home sweet home. (This of course assumes you don't have any higher-interest debt.)
The tax benefit of mortgage interest is often overstated. You're getting a tax break only on the amount of interest that exceeds the standard deduction, he says.
If the home is paid for, a financial catastrophe such as an illness will be easier to bear.
You'll have peace of mind. "This is an intangible benefit but it may be one of the most important," he says.
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