Skip to main content
No. of Recommendations: 0

Thanks for your input and comments.

The 8% is tax deductable. You can get very good tax free bonds at 5 1/2%, with no tax ever.
These bonds would be liquid.
Further, the money in MMs is available for your needs and wants without any hassle. If you get sick
and need big $$$, it would be harder to refinance after you are retired.
You've already qualified for the mortgage, paid your closing costs, etc etc. I'd opt for the liquidity
and leave the mortgage where it is.

I see these same advantages to waiting.

Here's the gist of my quantitative evaluation:

8% mortgage before tax -> 8*(1-.36)= 5.12% after tax; with a 36% marginal rate. This is the after-tax cost in waiting.

5% return on MM -> 5*(1-.31) = 4.05% after tax; with the 31% marginal rate after retirement. This is one part of the after-tax gain by waiting

36% marginal before retirement minus 31% marginal after retirement = 5% gain by waiting just due to the differences in marginal tax rates. This is also a after-tax gain

Costing 5.12% to wait
Gaining 9.05% to wait

Decision: wait

Does this seem sound and logical?

Of course, one item I am leaving out is the State taxes. These are a flat 6% and will not make much of a difference either way.


Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.