What percentage?

Susan from Abilene, Texas, asks Dave what percentage of your total net worth your mortgage should be after retirement.

QUESTION: Susan calls in from Abilene, Texas, with a question about retirement and mortgage percentages. She asks Dave what percentage of your total net worth your personal residence should be once you are retired.

ANSWER: I don’t have a set percentage. The larger your net worth, the smaller the percentage would be. In other words, if you’re worth $50 million, you wouldn’t want to have 50 percent in your home. But if you’re worth $150,000, you’re probably going to have more than 50 percent in your home.

So, the smaller your net worth is, the larger the percentage of your home will likely be. And that’s very reasonable. That’s one ratio you can look at. If you’re in the million-dollar range of net worth, and I’m just making this up on the spot — I don’t really have it figured out — but I don’t think I’d want to have more than half of it in my house. I think I’d want to have about a half-million in investments, and about a half-million in my house. Again, I haven’t done the math. That’s just a feeling I have.

But you can kind of see how I’m looking at that. You want to try and have as small a portion as possible, but you also have to have a home you can live in.


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