“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”
– Ayn Rand
As bonus season begins for our employee clients, we are often asked about paying off their house. My answer, like most things, is, “It depends.” Sometimes, clients would like work to be optional sooner than later, and sometimes life just throws a curveball. Before we advise on any big financial decision, we help our clients think through their long-term strategy by referring to their SCORE and discussing the following points:
If you’ve paid off your mortgage, then have an unexpected cash flow interruption, will you be able to refinance? It can be hard to refinance if you don’t have regular income from employment. It’s always an option to pay a bit more and pay off faster, but cash is always king in disruption.
If you retire prior to Medicare eligibility, health insurance can be very costly indeed. Plan ahead of time by funding health savings accounts. Also, benefiting from medical expense deductions that exceed certain thresholds of income may prove invaluable. These are more strategic options for the extra funds than paying off the house.
Lastly, it may be more strategic to benefit from existing low interest mortgage rates as other expenses escalate more quickly with rising inflation. With inflation running at multi-decade highs, those mortgage dollars on a low fixed rate are using dollars that are becoming cheaper and deductible, as well.
We are always happy to visit with our clients about financial issues that affect their long-term financial independence.
Orchestrating Fiscal Harmony™,
Kelly Kunst CFP®
2021 Five Star Wealth Manager
Once again, I am honored to be named a Five Star Wealth Manager by Texas Monthly. Nearly 4,000 Dallas-Fort Worth wealth managers were considered for the award; ten percent of these candidates were named 2021 Five Star Wealth Managers. Being recognized is always nice, but the real blessing is serving families and helping them on the path to fiscal harmony in their lives.
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