An Aggressive Goal

[FrugalGirl321]

You did not list your annual expenses, so it is hard to calculate your retirement needs.

He makes about $105 gross but we our living expenses are about 60% of that and we save the rest. In other words, we have about $5K in income and monthly expenses run about $4000 (this is after all 3 retirement accounts are funded). We also receive a profit sharing bonus every year that is not included in that figure, and occasionally some sizeable gift money.

We think that in retirement we can continue to live on 60% of our gross income, but our calculations have it figured at living on 70% so that we can be conservative.

I will look at your link.

[Money Gal]

Why Pay Off that Mortgage?

I am wondering why you want to pay off that mortgage? It is cheap money and generally you would earn more return if you invested in the market.

Although you think everything is stable, what if your husband was no longer able to work? You will have a paid off house, but no cash to live off of.

I like Vanguard Funds like a previous poster: index and target date funds are good if you don't know too much about investing yet. I'd put that extra towards investing now instead of eliminating the mortgage.

Debt aversion is fine, but mortgages are the cheapest money you can get your hands on, so I would not rush to pay it off.

[FrugalGirl321]

I am wondering why you want to pay off that mortgage? It is cheap money and generally you would earn more return if you invested in the market.

Yes, you're probably correct.

I guess it's our way of balancing more aggressive investments with something not as aggressive. We save so much money in our 401 and Roth's, and just overall, and have enough for about 8 months if my husband were unemployed, so we feel we're at least guaranteeing ourselves the mortgage return rate in such an unstable market.

As you said, we're never really certain about our employment and I'd be much happier not having that scheduled $1050 payment every month in a worst case scenario.

[littleroc02us]

To answer some of the questions:


Currently, we have $200K in his 401K and $5500 in ROTH's. Are we doing horrible?

Here is how I determine where I'm at for retirement. This came from the book "The Millionaire next Door". Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.