Pay off mortgage if ready to retire


Boy holding a stack of hundred dollar bills

An utterance from my DebtBoy just before Christmas gave me a shock reality check of how my retirement might spiral horribly out of my control.

With no warning, and no precursor conversation, he said: “Daddy, I’m going to live with you until I’m 47”.

Images of Garry McDonald and Ruth Cracknell in Mother and Son flashed before my eyes. But as Father and Son. Shudder.

What sort of bloody house do you live in with a 47-year-old son? Do you build him a kennel out the back? Do you make plans for him to move into the retirement village with you?

If he was now in his 20s, I’d have had a heart attack, cause he might have meant it. If he was now, say, 17, it would probably have been said in spite during an argument about Mrs DebtMan and I not being his maids.

Given he’s not yet 10, thankfully I think he really only meant “I really love you, Dad and I want to live with you forever”. Bless my Little DebtBoy.

However, if he was to follow through, he wouldn’t be leaving until some years after my 80th birthday. More concerningly, about two decades after my planned retirement date.

If he was seriously still there when I turned 70 and he was in his 30s, surely the logical step would be to downsize home for myself and Mrs DebtMan to squeeze him out onto the street?

Would that be fair? Actually, I don’t care. That’s now become part of the plan.

“The Retirement Home Plan” for Mrs DebtMan and myself had not previously included a contingency for adult children cramping our style.

We owned a home before the DebtKids came along. We upgraded from Yuppie Central to a something-with-a-yard when they arrived. And we’re now renovating to accommodate them as they approach teenage-hood.

(Another idea. For every year he’s with us beyond, say, 25, board will increase 10 per cent, compound. That’s going to hurt financially by about age 33. And might actually be a profitable venture.)

As is roughly average for a family, Mrs DebtMan and I will probably purchase a third home. But we’re so up to our necks in careers and kids’ weekend sports to have considered what that might be.

The family castle is a different proposition for those who are actually approaching retirement and without kids who are going to live with them until 47. For most, at retirement, the kids are long gone. The home is theirs. And it’s usually the most valuable asset, followed by superannuation.

In days gone by, the general advice was to pay off your home loan, with your golden handshake, after decades in the workforce, often with the same employer.

Those days are long gone. A job for life is a thing of the past. Rarely happens.

Your home is your castle. It’s the thing you most need to protect. And making sure that it’s yours, at the end of a working life, is critical.

And understanding where the home fits in to the importance of your retirement plan is also critical.

Current rules state that your home is not an assessable asset for the purposes of Centrelink age pensions.

It doesn’t matter if your home is worth $300,000 or $3 million, it’s value simply doesn’t count from the point of view of Centrelink assessing what government age pension you’re entitled to. Currently. (And this may well change in the future.)

How do you make the most of your castle, in the leadup to retirement?

Pay that loan off. There’s little more important than making sure that you own 100% of your home at retirement. The bank’s ownership should be diddly squat.

If that means some sacrifices need to be made during your working life to pay it of … then, simply, that’s what you’ve got to do.

It’s about your life and the lifestyle that you (and your partner) want to live. And that life should be around living where you want to live. To live the lifestyle that you (and your partner) have dreamed about for your retirement, no matter how grand or modest.

And may your children not threaten to live with you into your 80s.

Bruce Brammall is the author of Mortgages Made Easy and managing director of Bruce Brammall Financial. E:

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