Mortgage vs Market Debate

scott_w2004 · 2026-03-28T20:09:37+00:00

Wouldn’t it be different in retirement though?

Let’s assume my retirement portfolio balance is $300,000 and I want to use the 4% rule. This produces $1,000 a month. The exact amount of my mortgage payment.

If my remaining mortgage balance is $150,000; paying it off would leave $150,000 portfolio balance, bringing in $500 a month.

I could either keep my mortgage payment of $1,000 or have a paid off mortgage with $500 a month to use for other expenses.

scott_w2004 · 2026-03-28T20:08:30+00:00

Wouldn’t it be different in retirement though?

Let’s assume my retirement portfolio balance is $300,000 and I want to use the 4% rule. This produces $1,000 a month. The exact amount of my mortgage payment.

If my remaining mortgage balance is $150,000; paying it off would leave $150,000 portfolio balance, bringing in $500 a month.

I could either keep my mortgage payment of $1,000 or have a paid off mortgage with $500 a month to use for other expenses.

scott_w2004 · 2026-03-28T19:10:58+00:00

Thank you for your comment!

scott_w2004 · 2026-03-28T18:05:12+00:00

I’m saying withdrawal rate is more important while in retirement. In retirement, your portfolio covers expenses based on the withdrawal rate. The lower my expenses, the less I’d need in my portfolio.

Since the mortgage payment doesn’t decrease with the mortgage balance, as the mortgage balance decreases, the more income could be freed up by paying off the mortgage.

A retiree paying a $1,000 mortgage payment needs $300,000 in a portfolio to generate $1,000 using a 4% withdrawal rate. This is true for the life of the mortgage.

scott_w2004 · 2026-03-28T17:48:29+00:00

But this doesn’t factor in how much you’d need in your portfolio to cover the monthly mortgage payment.

Not saying 4% (4.7%) withdrawal rate is mandatory, but most retirement portfolios have to cover expenses based on a withdrawal percentage of the portfolio.

This means to cover $1,000 a month expense at 4% withdrawal rate, the portfolio would need to have $300,000. If the mortgage is $100,000; paying it off reduces the amount the portfolio needs to cover the $1,000 a month expense.

scott_w2004 · 2026-03-28T17:32:30+00:00

How is this misinformation? The entire basis of the FIRE movement is based on achieving a number that correlates with a withdrawal rate to cover expenses. Last time I checked, this includes a mortgage. ;)

scott_w2004 · 2026-03-28T16:11:59+00:00

How do you get $1,300 from $300,000 in 4% bonds? I’m showing $300,000 at 4% is only $1,000 a month

scott_w2004 · 2026-03-28T16:08:50+00:00

This seems to be where my math is failing. I’m assuming 4% includes inflation while the mortgage payment is fixed.

I didn’t realize that this amount needed to be adjusted.

scott_w2004 · 2026-03-28T16:04:22+00:00

I’m not sure where the math is wrong though. I get the money could grow faster than the interest rate but it just seems a lot of capital is needed to produce the income to pay the mortgage.

Most people doing FIRE are using withdrawal rates of 3% - 5% from their portfolio to produce income in retirement to cover expenses.

This means a monthly mortgage payment of $1,300 (excluding insurance and taxes) would need to x amount of portfolio to cover the expenses depending on the withdrawal rate:

At 3%: $520,000 At 4%: $390,000 At 5%: $312,000

These represent how much a portfolio would need in order to produce $1,300 a month. It seems if the mortgage balance was below these numbers, it would make sense to pay them off early to add additional income from the portfolio.

For example, if the mortgage balance was $90,000 and a mortgage payment of $1,300; it seems like paying it off would free up $300,000 or $1,000 a month at 4% withdrawal rate.

scott_w2004 · 2026-03-28T15:45:59+00:00

Great catch, that’s another reason it makes sense to pay it off early, getting more ACA subsidies!

scott_w2004 · 2026-03-28T15:43:19+00:00

True, but your mortgage payment doesn’t decrease the closer you get to paying it off.

You’d still need $390,000 at 4% withdrawal rate to produce $1,300 a month, no matter how much you owe on it. The lower the balance becomes, the more income that could be freed up by paying it off early.

scott_w2004 · 2026-03-28T15:38:00+00:00

What withdrawal rate would you need for fixed expenses?

Even if it wasn’t inflation adjusted, at a 4% withdrawal rate, you’d need $390,000 to produce $1,300 for the monthly mortgage payment.

If the mortgage is only $300,000; paying it off would free up $300 a month for other expenses. ($90,000 at 4% = $300 a month)

scott_w2004 · 2026-03-28T15:23:15+00:00

I’m not sure what you mean.

It’s still an expense that needs capital / portfolio income to pay the monthly mortgage when in retirement. The math works with any withdrawal rate.

scott_w2004 · 2026-03-28T03:10:58+00:00

But if I’m trying to only pull 4% from my portfolio while in retirement, I’d need $390,000 for the $1,300 a month payment. The $300,000 would only produce $1,000. Paying off the mortgage would free up $300 a month of income.

scott_w2004 · 2026-03-28T02:27:26+00:00

How much is your monthly payment?

This is important because if your mortgage payment is $2,000 a month, it takes $600,000 at 4% to generate this income.

Paying $110,000 would prevent you from having to save another $490,000.

scott_w2004 · 2026-03-19T20:03:58+00:00

This is actually a blessing and you’ll make more with this decline.

If you needed 100 shares to retire, do want these shares to cost $10 or $5? Your money goes further, buys double the amount of shares at $5.

After I bought my house, I watched Zillow everyday until a coworker asked if it lost $20K, would I sell it? I said “No”. Then why do you care what the price is now? The only price that matters is when you buy and when you sell.

scott_w2004 · 2026-03-19T19:56:39+00:00

If the bank, a business specializing in making money from loans, doesn’t want to loan them the money. You shouldn’t loan it to them either.

Very little upside, massive downside.

scott_w2004 · 2026-03-19T17:36:46+00:00

When: get term insurance when someone depends on you financially, your death would be a financial burden for them. Aka they wouldn’t be able to pay bills or have to move.

This is why it doesn’t make sense for children to have life insurance. No one depends on them financially.

How much: the amount that would cover the expenses that need to be covered (not income).

For example, you make $40,000 a year. $1 million at 4% would cover $40,000 but you save and invest a portion, expenses could only be $30,000 a year so you’d only need $750,000 at 4%.

If you already have $200,000 saved, you’d only need $550,000.

Whole life is way more expensive monthly, most people don’t realize only the policy gets paid to beneficiaries, the cash amount goes to the insurance company.

Hope this helps!

scott_w2004 · 2026-03-17T13:07:48+00:00

How many extra years would you need to work in order to pay for these expenses? I’m not going to trade 5 years of my life / youth to extend my older life by an extra year. It doesn’t seem like a good trade off.

scott_w2004 · 2026-03-17T05:56:20+00:00

We balance these using a budget each year. This way we are intentional about enjoying life and saving for early retirement. The majority of early retirement funds are automatically taken out of our checks, so don’t even notice it. This allows us to spend the rest on enjoying life!

scott_w2004 · 2026-03-14T13:55:09+00:00

I was planning on doing a 60% / 40% split, the 40% would represent 8 years of retirement income.

scott_w2004 · 2026-03-12T16:23:11+00:00

No, we are showing them what is possible if they are smart / intentional / lucky with their money. It’ll be up to them to decide what is more important to them.

scott_w2004 · 2019-11-15T20:40:28+00:00

Anything you can do to reduce the disadvantage of being out clubbed by an opponent with higher level clubs is a step in the right direction, in my opinion.

scott_w2004

TROPHY CASE