My client had $2.5 million saved for retirement. She was 63 years old, and she decided that she was

going to keep working for five more years because of an $1,800 per month mortgage payment that she

wanted to fully pay off. This video is about why that was one of the most expensive financial

decisions she could make, despite it looking very responsible on the outside. It's retirement advice

that sounds very sensible. Pay off your mortgage before you retire. It feels right. There is no outside. It's retirement advice that sounds very sensible. Pay off your mortgage before you

retire. It feels right. There is no debt. It's clean. It's responsible. Nothing to worry about. This is

the mindset that many people have going into retirement. And for some people, in some situations,

it's absolutely the right call. But I want to show you what this cost one of my clients. Because for her, and my guess is this is the same for many of you watching this, following that advice meant working five more years than she had to. And the years she gave up weren't the tired, worn out years at the end. They were the healthiest years at the beginning. The years where she still had energy. The years where her husband was still healthy. The years that she was going to look back on and wish she could have them back. The hard part now is she can't get those back. And she did, at least on paper, what seemed to be the wise, responsible, prudent thing to do. She just believes something that wasn't true for her situation. So let me show you the math for her situation. So as you're exploring the same thing with your

retirement, you might know what's best for you. So let's paint the picture in a little bit more detail.

My client, let's call her Susan. She came to me at 63. She had two and a half million dollars in her portfolio and a mortgage that had about five more years until it's fully paid off. That mortgage payment was $1,800 per month, so about $21,000, $22,000 per year.

She had done the math on what she wanted to spend in retirement.

All in, including the mortgage, she needed about $100,000 per year. So this broke down to about $80,000 of non-mortgage expenses and about $20,000 per year in that mortgage expense. So here's the most important thing about Susan's situation. I want you to think about your situation as I explained this. I don't care what Susan's mortgage balance was or her payment

or anything else there. All I care about here was what Susan's total expenses, including the

mortgage. And in this case, that came out to $100,000 per year. Now, $100,000 per year is exactly

4% of a $2.5 million portfolio.

So to me, I don't care if Susan has one year left on that mortgage or 30 years left on that mortgage.

What I'm focused on is can her portfolio support it?

When you look at a 4% withdrawal rate for someone who's already in their mid-60s, that's a very comfortable and based on long-term averages and historical norms, that's a very sustainable withdrawal rate. I mean, her portfolio could sustain that over a 30-plus year retirement assuming it was invested the correct way. That's before even accounting for the fact that, yes, $100,000 is coming from the portfolio in the first years. But once Social Security kicks in, and especially when that mortgage is paid off in five years, that withdrawal rate shrinks even more. So from my standpoint, I'm not looking at the balance sheet here. I'm not saying, Susan, you have a mortgage, therefore you can't retire. No, what I want to look at is Susan, what does your cash flow look like? What income sources are coming in and how does that compare to the expenses you have going out? That's the equation that really matters for your ability to retire. So it would have worked. But Susan had one rule for herself. She was not going to retire until that mortgage was paid off. This was an idea that was in her mind for the longest time and it was not something she was going to let go of. She held onto it her entire working life, so she decided to work five more years. Here's what happened. The mortgage was paid off by the time

that she turned 68. That was gone. Her expenses went from 100,000 per year at that point to 80,000 per year

at that point. Her portfolio of two and a half million at age 63 had grown to about three and a half

million dollars by age 68. On paper, Susan was golden. Everything was improved. Everything was

optimized. But the reality is her life in your life, in your retirement, do not just live on paper. What Susan actually missed is five years, where she and her husband both had their health and could travel and enjoy and spend time together in retirement. She missed five years because in her mind, yeah, I have 30 years of retirement, but not all those years are created equal. The first five to 10 might be the only years where you have your full health. And based on that math, Susan missed a giant portion, not of her lifespan, but of her health span. And here's the kicker. All she really had to show for it was a bigger portfolio and lower expenses mean there's just that much more

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