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RogerD wrote:

I wouldn't let the home equity question affect asset allocation, but it would affect the question of how much retirement income you need and how serious it would be to fall short of the goal. If you plan on retiring with little equity, your income will have to cover rent/mortgage. If on the other hand the home will be paid off or have the equite to purchase a smaller home for cash, then you can retire on a much lower income with the same standard of living. That should be taken into account.

My personal opinion is that you can also afford greater uncertainty in your retirement income if the house is paid off, because that is a large inflexible expense. In that sense, even without considering a paid-off house as an investment, avoiding a fixed and inflexible mortgage/rent expense permits a more stock-oriented asset allocation well into retirement.

Well said, Sir. I agree with the points you make. But then why wouldn't I if they make sense, which they do?

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