A home loan is more than just a loan...
Stashing Away for Your Mortgage
The primary reason you save for retirement is so you can cover your living costs when you're no longer working (not so your children inherit money). One of the biggest retirement expenses is a mortgage. With so many people trading up or refinancing later in life, it's going to be increasingly common for retirees to still be paying off a house into their 70s.
Let's say at age 50 you bought or refinanced a home with a $300,000, 30-year fixed rate mortgage at 6.5 percent. That works out to monthly payments of $1,896, or $22,752 a year. At age 65 you decide (or are forced) to retire, so there's no more income. You want to stay in the house you love, but are worried about the 15 years of payments left on the mortgage.
Calculations show, you would need a 401(k) stash of $500,000 to cover the house payments without using your principal. This is assuming that the $500,000 earns a conservative 5% a year, which comes to $25,000 a year. That $25,000 is enough to cover the mortgage if your income tax rate in retirement is 15%; if you're in the 25% bracket, you'll be a little bit short after netting out the tax owed on your withdrawals.
... it's the way you live your life.
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