More on Debt in Retirement

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TRyan
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More on Debt in Retirement

Post by TRyan »


"Buy Low Sell High"
WiseNLucky
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Post by WiseNLucky »

Hard to be sympathetic to someone with 75 grand in credit card debt ...


I'm with you there! :shock:

I don't even owe that much against my home. I think no debt is the only way to go in retirement.
WiseNLucky

I just wish everyone could step back and get less car and less house then they want, and realize they don't NEED more. -- NeuroFool
peteyperson
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Post by peteyperson »

Other than via an annuity or pension from work, you would need assets to generate income to live off in retirement. It would make no sense to hold debt in such a circumstance unless those assets could only be released slowly to begin with.

Petey
WiseNLucky wrote:
Hard to be sympathetic to someone with 75 grand in credit card debt ...


I'm with you there! :shock:

I don't even owe that much against my home. I think no debt is the only way to go in retirement.
Cut-Throat
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Post by Cut-Throat »

The only debt that I'm considering in retirement is a reverse mortgage. That way I won't have to worry about paying it off. :D
therealchips
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Debt in Retirement

Post by therealchips »

I agree with the idea of having no debt in retirement. I also agree with the suggestion in the article that credit cards be paid off every month regardless of whether the card-holder has retired. The interest rates on that debt is unconscionably high. People who take on credit-card debt to avoid reducing their standard of living are taking a terrible risk.

The only qualification I would add is that in retirement, I loaned myself the money to cover part of a large purchase -- a new house costing more than I cleared from the old one. The old house had no mortgage balance; I didn't need a mortgage on the new one either by taking this advance on my spending. The loan to myself was a bookkeeping entry, and not a debt as far as an ouside review would see it. It just ran down my cash reserves for a while. The point was not to reduce the retirement stash permanently by simply taking the money from it for the new house balance. I don't count the house as part of the retirement stash just as I don't count the present value of my pensions. I paid the "loan" off within two years of moving here. Treating the house purchase as a consumer expenditure (like taxes, insurance, utilities, etc.), as I did, is hyperconservative; it ignores that I could get the purchase money back by selling the house, while the other expenditures are gone forever. I may "loan" myself the money to buy a new car one day, too.
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
TRyan
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Post by TRyan »

Interesting to see that living mortgage-free does not mean living for free ...

http://cbs.marketwatch.com/news/story.a ... iteid=mktw

Americans who didn't have a mortgage on their home paid just $295 a month for housing, up from $267 in 1990. But the number of those homeowners was dwindling; in 1990 and 1980, 35 percent of homeowners held no mortgage, in 1970, 39 percent, and in 1960, 42 percent owned their houses free and clear.
"Buy Low Sell High"
WiseNLucky
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Post by WiseNLucky »

in 1990 and 1980, 35 percent of homeowners held no mortgage, in 1970, 39 percent, and in 1960, 42 percent owned their houses free and clear.


Demographics could play a major role with this statistic. With the baby boom retiring over the next 15 or 20 years, it would be interesting to see if that percentage begins to creep back up.
WiseNLucky

I just wish everyone could step back and get less car and less house then they want, and realize they don't NEED more. -- NeuroFool
therealchips
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What fraction of homeowners have 50% equity? 60%?

Post by therealchips »

I would also like to see a finer breakdown in homeowner's equity. This data shows only two of the possibilities: the owner's equity is 100% or it isn't. I have searched for data that would say: x% of owners have equity of at least 90% but not 100%; y% have equity of at least 80% but not as much as 90%; etc., down to the sad cases whose equity is negative -- those who are "upside down". That data does not seem to be available or maybe I don't know how to search for it. If the fraction of homeowners with 100% equity goes down while there is a great increase in the number with at least 90% equity, the picture of excessive debt is not so unsettling. Who knows?
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
wanderer
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Post by wanderer »

per a 'recent' Flow of Funds reports, home mortgage debt runs somewhere around 45%-50% for the nation as a whole. home equity loans are included in that total. (figures are from Q3 2002).
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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