Dave Says She’ll be Just Fine and The Best Laid Plan
Dear Dave,
She’ll be just fine
My mother is 76 years old and her only debt is the mortgage. She has $600,000.00 in retirement accounts and a long-term insurance policy. She has only $25,000 in her money market account, which allows her to write checks for bills and everyday purchases. This worries me, to be honest. Am I being unreasonable to worry about her? I am also not sure about her plans to pay off her mortgage. Your opinion would be greatly appreciated.
Dear Kelly,
Kelly
You seem surprised that she would still be on the stock exchange at her age. To me, this is not at all a bad thing. Most financial planners will tell you that you should be very conservative with your money, especially as you age. You’ve said that she doesn’t plan to use the money but rather the income. If this is the case, then she will not be able to spend it all. I think she will be fine if she invests in mutual funds, not single stocks. Let’s now talk about your mortgage. I’d recommend that she pay off the mortgage. It’s a good idea to pay off the house at 76 years old if she still has $540,000 remaining. She can then start to take a percentage from the remaining amount after paying off the mortgage. She will not need to send money to the bank anymore, since she won’t have to make the payment.
Do you think we should pay extra toward the house, or invest that money on top of the 15% we’re putting into retirement? Would you suggest we pay extra for the house or invest the money we put into retirement on top of our 15%?
Dear March,
You’re not doing a bad thing by putting the extra cash into retirement. You’re also not doing anything bad by investing the extra money in retirement. You never know what the future holds, no matter how carefully you plan. You may think you’re in the know. Even if you think you have considered all possibilities, the truth is that even the best and smartest plans don’t always work out as we expect or want. Even the most intelligent plans may not always turn out as we expect.
