As part of my Eight Rules for Life series, here’s my First Rule of Retirement aka A mortgage isn’t a retirement plan.
My first rule of retirement is that a mortgage isn't a retirement plan. The point really isn't just about mortgages. It's a story about debt. I don't endorse any retirement plan that includes carrying debt. If you have debt you have something to lose and at a time in which you're likely to be living on a fixed income and potentially becoming less viable in the workforce.
The average person faces significant negative financial adversity about every eight years. If that happens in retirement and you have the pressure of meeting a mortgage payment, there's a lot to lose. Working your entire life only to potentially lose your home in the end with limited options isn’t acceptable.
For that reason, when it comes to timing retirement, I’ll only entertain the question if it begins without any debt, including your mortgage. From there the most important consideration is whether you have the residual income to support yourself overtime.
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