Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in
Skip to Main Content

Our Guide to Workplace Student Loan Programs

Retirement

2 Minute Read

Pay Off the Mortgage or Save for Retirement?

2 Minute Read

Taking out a mortgage can be a sobering experience. You’re probably borrowing more money than you ever have before. Then the interest adds tens of thousands of dollars to your original loan amount.

A lot of homeowners take one look at that bottom line and decide to pay off their mortgage early—no matter what. Some take it so far that they sacrifice retirement savings in order to pay off their home loan.

At first thought, it doesn’t seem like a bad idea. You pay off the mortgage early and have more money to devote to retirement investing once you own your home free and clear.

But that idea ignores the most important fact about investing: the longer you invest, the more your money can grow. If you delay retirement investing until after you pay the mortgage, you’re losing valuable time that you won’t be able to make up—even with increased contributions to your retirement accounts.

A $288,000 Mistake

Let’s look at two homeowners with identical incomes and 30-year mortgages. (Dave doesn’t recommend 30-year mortgages, but that’s what most homeowners have.) Jane Homeowner makes her regular house payments and invests $500 a month toward retirement over the lifetime of her mortgage. By the time she retires, she could have nearly $2 million.

Be confident about your retirement. Find an investing pro in your area today. 

Joe Homeowner decides to double up on his house payments instead of investing for retirement. He pays off his mortgage in 15 years, but he has zero retirement savings. To catch up with Jane, he’ll have to invest $2,600 a month!

Look at it another way: Jane will invest a total of $180,000 for retirement. But because she started early, compound growth does the heavy lifting. Joe must invest a total of $468,000 for the same outcome—a $2 million-dollar nest egg and a paid-for home. Which bottom line looks better to you?

This is why Dave says you should first invest 15% of your income for retirement before you work toward paying off your mortgage.

Need to Talk About It?

If you’re still not convinced that retirement investing should come before you pay off the mortgage, you can talk to an investing professional.

Find an investing pro in your area today!

What Is Wealth Management?

More money, more problems? It’s true! Building wealth comes with many exciting opportunities and potential pitfalls—and wealth management could help you navigate through both so you can reach your financial goals.

The High Price of a 401(k) Withdrawal

Life throws us lots of curve balls, and some of them are expensive. Should you turn to your 401(k) in an emergency? Chris Hogan breaks down the details of the 401(k) withdrawal and explains your options.

Marriage and Investments: What You Should Know

There’s a reason why most married millionaires have been married, on average, for more than 30 years. When you work together toward a common goal for that long, you can accomplish almost anything! Here are some tips to help you and your spouse get on the same page with investing.
Thank you!  Your guide is on its way.

Build Long-Term Wealth 

Build Long-Term Wealth

Work with an investing pro and take control of your future.
Get Started

Build Long-Term Wealth

Work with an investing pro and take control of your future.
Get Started