It always requires a certain amount of risk for ones investments to earn an expected rate of return. After you retire and are living off of your investments, it makes sense to pay off your mortgage because it lowers your withdrawal amount. 0% is the ultimate SWR....

With sincere apologies, I don't think this is sound reasoning. Paying off your mortgage lowers your withdrawal, but it also reduces your income. That, in turn, can lead to increased risk.

I can't give you a reasonable mortgage example, because in the real world mortgage interest almost always more than your SWR. But rent is sometimes less, and it increases your withdrawal the same way a mortgage does.

Let's say you have $20,000 / year expenses beyond housing and $650,000 to retire. You could retire in an apartment at $500 / month, $6000 / year, or you can buy an equivalent condo for $200,000 plus $100 / month in property taxes and maintenance. Purchasing it reduces your withdrawals by $4800 / year, but it also cuts your total funds to $450,000. $26,000 / year from $650,000 was 4%, but $21,200 / year from $450,000 is 4.7%. Your withdrawal rate has gone up and so has your risk.

That's a pretty ridiculous price for a condo that would rent for $500 / month, but housing prices have climbed in some parts of the country without a corresponding hike in rents.

You can of course argue that you should saving more than $650,000 in this scenario is safer, but that's true whether you purchase or rent. You can always do things that will make you more comfortable, but the point of SWR discussions is to figure out the minimum amount needed to retire safely.

- Gus