Pay down mortgage or save for retirement?

[Florence]

Sell the house, the cars, the kids, and anything else you can get your hands on. Seriously. Both of you get some kind of second income. You know the live frugal drill and start paying off debt. At 59 with no retirement savings, this is an emergency. Get everything but the mortgage paid off and get some emergency savings in place before you start retirement savings. IMHO.

[catherine]

I don't know why I didn't read this post earlier.. just catching up now, with interest, because, redfox, your situation is very similar to mine.. I am 61 (oops, I almost said 62, but won't be 62 until late March). I have exactly $6,000 in an IRA. We own our home but not outright--with a big mortgage--and I refinanced last year with 3.25 15-fixed year rate. Unfortunately I had to fold in DH's commercial loan balance, which brought our principal up to $260,000, but at the 3.25 for 15 years, it's amazing how the amortization of principal vs. interest works so much better in your favor vs. a 30 year higher interest loan.

I also would love to stay in our house if it's at all possible, but I'm freaked out by the uncertainties of my earning potential (I doubt DH's earning potential.. I'm planning on encouraging him to take his SS at age 62, unless he gets with the program and starts thinking rationally about our situation.

But enough about me--it's your post.. I personally like the advice offered:

1) try to refinance
2) pay off CC debt
3) pay off SL debt while checking into the non-profit 10-year forgiveness program (my DS is actually taking advantage of that plan)
4) put maximum allowable for 55+ into 401k/IRA
5) pay whatever you can towards the house. I know that if you get a low interest rate for the house (if you refinance) it's counterintuitive to sacrifice potentially higher interest earned in savings, but personally, I love the security that no bank has any say in the roof over my head.

[pinkytoe]

I think it's especially hard when so many of the stories out there talk about people with hundreds of thousands saved for retirement. It would be interesting to know what's really going on with the majority of people near retirement. We are in better shape but not anywhere near what articles say we should have.

[catherine]

Catherine, I'm sorry you're in similar straits. What else have you thought through? I've been reading about the huge number of boomers who are likewise don't have adequate retirement savings. I wonder what others are doing.

In the best possible scenario, I continue making what I've been making consistently over the next seven years. If I do, I can probably pay off all debt. Then spend another year saving like crazy. If I take SS at 70 and my earnings are in the same ballpark as in the past, I actually get a pretty good SS check, and if the house is paid off, I'm not worried.

But, that's best case scenario. And it's just one slim step away from worst case scenario which would be work stops flowing, I can't pay the bills and all the other financial doomsday stuff occurs. I have actually considered selling my house and buying a Tumbleweed house and parking it in my son's back yard in VT. That would be the doomsday scenario, and to be honest, things could be worse, so I am doing my best to stay busy and active in my career, and if s**t happens, c'est la vie. I'll be fine, one way or another.

[Teacher Terry]

Redfox, I hate that you have had to spend so much $ to pay for your cancer treatment. I have friends that had a paid for home, savings,etc and even though they had health insurance are now broke & both sick again. I will never use all my $ to pay for health costs-they can take small payments. I know you & others had the best intentions but it does not seem to matter. I like Mr MM for inspiration but people seem to be smug & don't realize what can happen in life-they are mostly young. Pinkytoe, most people have very little $ if you look at the stats. We used all our savings to pay our house off. WE can live frugally on our pensions or better with our consulting work until we either can't get any or are too old.

[flowerseverywhere]

Deleted. Op took my comments the wrong way.

[pinkytoe]

I like Mr MM for inspiration but people seem to be smug & don't realize what can happen in life-they are mostly young.

So true. When you are young, all things seem possible. All the planning and saving in the world can't save one from things like illness or accidents.
I love to think about all these financial scenarios and how to climb out of them. My older brother, now 65, recently came for a visit and we were shocked to learn that he and his wife have quite a bit of debt ($125K mortgage, credit card, car) yet they have been retired for 10 years. They live off of SS and his small military pension.

[Teacher Terry]

Redfox, I understand completely-we also had to rescue our step son. Pinkytoe, that is too bad about your brother but it sounds like they are making it work. Even though we don't have much $ saved I feel blessed that we are debt free, have our pensions and right now the health to be consultants. However, that can all change in an instant. WE have some friends ( a couple) that both have serious cancer at the same time. They are wonderful people but are having a tough time.

[redfox]

Thanks, Terry. Being a stepparent is the hardest thing I have ever done. I am proud that we sacrificed for our two kids. I am holding your friends in the Light... I cannot imagine both my DH & me having cancer at the same time. Wow.

I must confess that I was rather shocked by Yarrow's words and the assumption that she, and apparently flowerseverywhere made, that my debt was either being defaulted upon or was due to personal irresponsibility, without any evidence to support those conclusions. (I've reached out to Yarrow to talk about it.) Never in my wildest imagination would I make those assumptions. I always assume that life hands out what it does, and we all do the best we can.

[flowerseverywhere]

If you feel you did the best you could hold your head high and be proud. I am not your enemy by any means, just human.