Tranel Talks Column

Retirement Planning: Debt Management

Time to read: 2 minutes


Today, The Tranel Financial Group would like to discuss debt management. Debt management is simply looking at what expenses you have and saying can I continue to carry this expense or how much is this going to cost me?

Debt management in retirement can be complex based on your situation.

A common question we get about retirement and debt management: should I pay off the mortgage and/or does it make sense to pay extra on the mortgage etc. Our normal response: Every person’s situation is different.

For this example:

  • Mortgage payment that was costing you $3,000 per month
  • You wanted to retire

Do you know how much your retirement income needs to be spent or utilized for that mortgage payment?

Most people say well it cost me $3,000 per month. It’s not costing you $3,000 per month to carry that mortgage. What it is costing you is the opportunity for your money to be growing because you have a $3,000 monthly expense.

Let’s break that down. If you had a 3.6% dividend on your portfolio, $3,000 per month in expense is $36,000 per year. You need $1,000,000 generating a 3.6% dividend to cover your mortgage payment. WHOA.

Therefore, your mortgage payment doesn’t cost you $3,000 a month it’s costing you the dividend on a $1,000,000 of your portfolio. You can see how these expenses right can really accrue in where debt management and having the right debt and the right expenses is key for your success in retirement.

If you are looking for more information on retirement, please click here for more information on how The Tranel Financial Group can help you retire to reach your ideal financial life.

If you would prefer to listen, please click the YouTube Video below to listen to Tyler Braun, Financial Advisor, talk about debt management in retirement.