Question: I’m in my mid-50s and can free about $100 a month to put toward retirement. Would I be better off to invest it in an IRA or use it to pay off my home mortgage early? I also have a good company retirement plan that will provide half of my salary when I retire. Response: First of all, be very thankful for your retirement plan at work—such plans are few and far between these days. Now, assuming that you have adequate savings for current budget needs, I would always recommend you apply any extra cash to your mortgage. Then when your mortgage is paid off, use some or all of your previous mortgage payment to invest. That way you own your home, no matter what, and your retirement income needs will decrease by the amount of your old mortgage payments. However, if you can’t eliminate the mortgage before retirement, and/or you plan to sell your home after retiring, it may make more sense not to pay off your existing mortgage (note: If your mortgage is an older fixed rate, assumable loan, it can be a real asset in attracting a potential buyer).
Category Archives: Investing
Time To Begin Investing?
Question: My wife and I would like to begin investing, but we find it hard to generate the money to do so. Can you help us? Response: I suggest you get in contact with either the Dave Ramsey organization (www.daveramsey.org) or Crown Financial Ministries (www.crown.org). When you do you will discover that it’s best for you to (1) Establish and live on a budget. (2) Establish an emergency fund in cash at a local bank. (3) Be debt free except for your home. Only then should you consider investing and only if you find a credible investment counselor who is willing to teach you how to invest, not just invest your money for you.