John, good to see you. I have a really important question should you pay off your mortgage before you retire? A lot of us want to go into retirement debt free, but it's not just a financial but also an emotional decision. So before you pay off the debt, we want to walk through a few considerations and first your mortgage rate.

Yeah, and you know, before we even get going, there is no easy answer to should we pay it off, right? It's very, it's very goal based and individual just like anything is but you know, when we look at interest rates, interest rates, obviously make that decision a little bit easier. Now, if you're if you have a new mortgage, I don't think anyone's refiling right now, but now a couple years ago, if you had that 3% mortgage, well then you're you have a little bit of cushion to where maybe you don't want to pay it off. Maybe you have some other things you want to pay down first, but now as we look on the screen, a 6.42% 30 year fixed, that is where you're going to want to be getting a little bit more aggressive to pay down that debt.

Okay, next consideration, tax consequences, John, I know you're always talking taxes. So what are the consequences of either paying off your mortgage or using money from your retirement accounts to pay down your mortgage?

Well, let's talk about paying off your mortgage first, and this is especially important in things to consider it if one of the spouses has some health issues. That could be a priority to pay off the mortgage because let's say you have a $2,000 a month mortgage payment, you know, you're having to take out about, say hypothetically 25 $2,600 A month after you know before taxes. That withdrawal rate is pretty heavy, but you're also keying in on that $30,000 a year in extra taxes. So you could if you could eliminate that debt, you're also going to reduce the tax liability that comes with it. Now, how do we pay that what accounts do we pay it out of? Do we pay it out? Love the retirement account? Like you said, that's where you really want to be careful because if you're paying it out of the retirement, you say, you know I have a $300,000 mortgage left. I'm going to just pay this thing off before I go into retirement. And you take it all from your IRA. Well, you just triggered a $300,000 income that's going to be added to any other income you have and that could adversely affect Medicare. If you're near Medicare age. It's going to affect net investment tax and it can also affect your capital gains. So there's a lot of things to consider. You know, if you have non retirement money whether a brokerage account or a bank account, especially if you're one of those people that have over $250,000 in FDIC insurance, like we talked about in our last video, you may want to use that money because that's going to have a lesser tax

impact. Certainly doesn't happen in a vacuum kind of a domino effect. So as interest rates climb that will make paying down certain debt more expensive. So how do we prioritize paying down our debt?

Yeah, well, let's talk about the evil debt first, right those credit cards, no matter what the interest is, pay that down first and really look at you know, if you have let's say, you have credit card debt, you have an auto loan debt or or an RV or boat debt and you have a home equity line of credit, and you have a house, well just start to prioritize which one's got the highest interest rate? Because that's money, you're just basically burning. So pay down the high interest rate first. I myself have a home equity line of credit on it. We don't have a balance, but I've been paying attention to the interest rates and you know, the interest rates have gone because they're variable they've gone from 4% Just a couple of years ago, now up to 7%. So, you know, that's obviously something I want to be cognizant of. And, you know, once you have all your other debts paid down, then you know if you have your mortgage, that's when you can look to you know, perhaps accelerate payments into that but definitely get the highest rates out first, and especially on those variable loan variable rate loans,

right. Okay, so now let's say that I have paid down my high interest debt, then do I focus on my mortgage or should I be focusing on other savings instead?

No, I would definitely especially if your goal is to pay down your mortgage or you have some you know, life events, like we talked about health issues. That's when I would definitely look to pay down your mortgage. And again, you don't have to do it in one or two years. Let's say you have 20 years left, on your mortgage, maybe you're just going to start doing a schedule that would accelerate the payments in 10 years. You know, so anytime you're paying a as long as you can afford to pay that mortgage off out of your savings, then go ahead and do it because again, interest is just free money. Basically you're giving to that bank. Just make sure you don't have any prepayment penalties on your mortgage.

Oh my god. Really important note there. That's a great point, John. I always value again talking this thing through because there's no cookie cutter answer. So thanks for walking through these considerations with me. If somebody has questions about having that conversation with you, what's the best way to reach you? Yeah, well, you can always visit our website www.go securus.com. We have a list of resources on that website, but you can also schedule an appointment under the contact us tab or you can give us a call at the office 858-935-6210. All right, John, thank you. Thank you Erin