Should you carry a mortgage in retirement?
Just a few months ago, anyone looking for safe fixed-income yields in retirement likely thought things were improving. After years of near-zero interest rates dating back to the Great Recession, retirees were able to find certificates of deposit yielding 3%.
Fast forward to now: The Federal Reserve has pushed short-term rates to zero as it attempts to mitigate the severity of the pandemic-induced recession. Available rates on CDs and high-quality bond funds have tumbled.
Where can retirees go for a decent return? Maybe it's time to dust off that file folder labeled "mortgage."
If you’re carrying a home mortgage in the 3% or 4% range, accelerating your payments or retiring the loan entirely may offer a better return than letting cash sit around earning next to nothing--and the numbers can be even more attractive for paying down higher-rate debt on credit cards or student loans.
Learn more in my latest column for Morningstar.
Recommended reading this week
Brokers must now act in your best interest - here’s what that really means . . . Men and women age differently, and it’s not just about longevity . . . Mass death is not inevitable . . . Automatic transfers of old 401(k) accounts to new employer plans are gaining ground . . . More than five million Americans lost health insurance coverage this spring as job losses accelerated . . . You can see friends and relatives during the pandemic, just do it carefully.
Not a subscriber yet? Take advantage of a special offer
Sign up now for the free or subscriber edition of the newsletter, and I’ll email a copy of my latest retirement guide to you. This one looks at dealing with the Social Security Administration during the COVID19 crisis.
Customer service at the Social Security Administration has changed during the coronavirus crisis - the agency closed its network of more than 1,200 field offices to the public in March.
Just a reminder- subscribers, have access to the entire series of guides at any time. Click on the little green button to subscribe, or go here to learn more.