Should You Pay Off That Mortgage Before Retirement?

Should you pay off that mortgage before heading into retirement?

For the average American, owning a home outright is a major objective in life from both a financial and a psychological perspective.  However, it may not always be the best strategy.

“The question comes up all the time with clients and for most preretirees — the goal is to pay off the mortgage,” said Lazetta Rainey Braxton, a certified financial planner who serves a large number of middle-income clients.

 “It’s a liquidity issue,” added Braxton, founder and CEO of advisory firm Financial Fountains. “If most of a person’s assets are in their home, they may be better off to keep paying it on a monthly basis.”

As with virtually every financial consideration, carrying or paying off a mortgage in retirement depends on a person’s circumstances. What are the terms of the mortgage? What are the other assets people have? What are their goals and cash-flow needs in retirement? What is their tolerance for risk?

Before addressing the issue of a potential mortgage payoff, Braxton advises people first determine whether they can and want to stay in the home during their retirement. Is the house located where they want to live — near their children, perhaps — and is it sustainable? Or, should they be downsizing their home in retirement? When that question is satisfied, then consider the mortgage.

There are no right and wrong answers as to whether you should pay off your mortgage with a lump-sum payment before you retire. Here are five key things to consider:

How do you feel about risk? Leaving aside emotion, the question of whether to pay off a mortgage comes down to whether the after-tax return you expect to earn on the money exceeds the after-tax cost of the mortgage payments.

While many current mortgages sport interest rates below 4 percent, that is still almost twice the not entirely risk-free rate of return on the 10-year Treasury bond. If you’re willing to take on more risk— likely in the form of stocks — carrying the mortgage could make sense. Keep in mind, however, that markets don’t always cooperate. “Unless you have enough money to handle sequence-of-return risk, be very careful,” said Braxton.

Where are the assets? If you’re a conservative person with most of your assets in bank accounts and certificates of deposit, paying off the mortgage is a no-brainer. You are paying out several times more in mortgage interest than you’re earning in the bank account. If the assets are in a taxable investment portfolio, the decision depends on whether you are earning more on the investments than you’re paying out on the mortgage and if you want to continue taking that risk.

Do not pay off mortgages with lump-sum distributions from tax-deferred 401(k) plans or IRAs. There is a 10 percent penalty for those younger than 59½ years old; the entire withdrawn amount is taxable as income; and your marginal tax rate will likely increase if the mortgage balance is substantial.

“When I show clients that they will need to withdraw $130,000 from their IRA to pay off a $100,000 mortgage, it’s pretty sobering,” said Rick Kahler, president of Kahler Financial Group.

The tax angle. The Tax Cuts and Jobs Act marginally reduces the tax advantage of having a mortgage — cutting the interest deduction to payments on the first $750,000 in loan balance, as opposed to $1 million.

For most people who itemize their tax deductions, however, mortgage interest payments are still fully deductible, meaning the after-tax cost of those payments could be substantially less. An individual in the 25 percent tax bracket with a mortgage carrying a 4 percent interest rate is paying an effective after-tax rate of 3 percent.

Because the new tax bill nearly doubled the standard deduction to $12,000 for individuals, mortgage interest payments, along with other deductible items such as medical costs and charitable donations, need to exceed that amount to make itemizing worthwhile. If you’re in a lower tax bracket, the benefit of keeping a mortgage is also less. Generally speaking, the higher your marginal tax bracket and the larger your mortgage interest payments (and deductions), the greater the tax benefit of keeping the mortgage.

Are you a saver? Retirement carries risks — increased medical costs being the most obvious — and the greater risk requires that people maintain a financial cushion to deal with potential outcomes. For people with large amounts of assets, the question of paying off a mortgage may have little impact on their financial security. For the rest of us, however, it has major consequences.

“I have clients who understand the logic of keeping a mortgage in retirement but who say they’ll sleep better at night if it’s paid off. I don’t argue with those clients.”-Rick Kahler, president of Kahler Financial Group

In most cases, those who use their financial assets to pay off mortgages will have to continue contributing to their investment portfolios to make up for the withdrawal. That’s not easy.

“There are a lot of people who have difficulty saving,” said Kahler. Monthly mortgage payments are typically baked into people’s budgets. The same discipline may be more difficult to summon when you need to beef up your diminished investment portfolio. “If people need their former monthly mortgage payments to be invested and not spent, I’ll recommend not paying off the mortgage,” said Kahler.

How important is it to you? For many people, owning their home outright and not having to make further payments on it in retirement gives them a very valuable sense of security — legitimate or not. Whatever the numbers underlying your financial situation, if continuing to carry a mortgage will be a big source of stress in retirement, pay it off.

“I have clients who understand the logic of keeping a mortgage in retirement but who say they’ll sleep better at night if it’s paid off,” said Kahler. “I don’t argue with those clients.”


Who Owns Florida Beaches? Private Land Owner Rights Can Clash With Public Beach Access….


For decades, Collier County’s beachfront in Southwest Florida has been a welcoming place.

Naples’ founding fathers ended the city’s east-west avenues at a street now buried under the sand. The extended avenues mean that, even today, each beach end has parking on every block. For a while, that was enough.

Who owns the beach in Collier County?

[This map shows beaches in Collier County. Any parcel of land shaded purple is public or government-owned land. Any parcel of land shaded orange is private land. Hover over the map to get more information]

But explosive growth soon made beach parking a big issue. City leaders threatened to start charging county residents for beach parking stickers. The county built the Vanderbilt Beach parking garage to help alleviate the coastal space strain.

So when the Ritz-Carlton first tried to mark off its beach south of the new garage for the exclusive use of hotel guests, the public fought back. It was Collier’s first realization that the beach might not be the publicly owned sandy park everyone believed they had an undisputed right to roam.

The Florida Department of Environmental Protection was called in to make sure the line was drawn in the right place. During especially busy times, the Ritz would post a guard to shoo away visitors who weren’t hotel guests. The county and the Ritz settled into an uneasy understanding in which the hotel uses the entire length of its beach for guests  about 30 peak days a year and opens some of it to the public on other days.

Then one spring morning in 2010, visitors walked onto Vanderbilt Beach and found cones and signs marking off a part of the beach in front of the Moraya Bay condominium.


They overran County Commission chambers, demanding commissioners fight back. They did, voting to take whatever steps were needed, including going to court.

Moraya Bay eventually relented, removing the cones and the signs, and making court action moot. “It looks like a free country,” a 77-year-old Cape Cod woman observed as beachgoers spread their chairs and blankets over sand that had been off-limits the day before.

Moraya Bay developers argued they were simply trying to make the same use of its private beach as other Collier beach clubs, including the Port Royal Club, the Edgewater Beach Hotel, the Naples Beach Hotel and Golf Club, the Ritz-Carlton and La Playa.

After a new County Commission was seated this year, commissioners received emails from the Naples Park Association and beach access advocate Graham Ginsberg about Moraya Bay again marking off its beach.

“Collier County government has yet to provide a solution and fairness for the public use of our beaches,” Ginsberg wrote in one email.

County Attorney Jeff Klatzkow told commissioners this summer he could offer a public beach access law for their review. It would be limited to Vanderbilt Beach and based on the customary use doctrine and the $20 million in public money used to maintain the beach, he wrote.

But, he added, it also might not be worth the trouble unless more beach visitors come forward with stories of being wrongfully run off the beach.

“My concern is that such an ordinance will be controversial, will bring out both the private property groups as well as the public access groups, and may result in bad feelings among many,” Klatzkow wrote.

Residents of Lee County shared horror stories similar to beachfront owners in Walton County, said Dawn Koncikowski, long-time resident of Little Hickory Island.

“Since the early 2000s, I’ve had a ‘No Trespassing’ sign on the beach behind my house,” she said. “There were break-ins in people’s homes and property, and the police recommended to put up signs. I’m just protecting my private property rights.”

Source: Naples Daily News

Southwest Florida Airport Expansion

If you’ve ever struggled to cool your jets in a long security checkpoint line at Southwest Florida International, know there are airport expansion plans designed to ease your pain.

But it’s going to take four more years before the big relief comes.

Meantime, things could get worse. Analysis shows wait times could soar to more than two hours if passenger traffic soared beyond its current levels during peak hours, in the peak winter travel months.

The expansion will cost between $150 million and  $180 million, shift shops and restaurants to post-security spaces and enlarge the passenger terminal’s second floor.

Project design could begin this year and the work go out for bids the last half of 2019 –with construction starting in 2020 and completion targeted for 2022.

Lee County Port Authority also wants to update passenger check-in areas inside and outside the terminal, at an estimated cost between $7 million and $10 million.

The plans go to Lee airports’ citizen-advisers Feb. 20. County commissioners sitting as the port authority board will weigh-in on the design contract on March 8.

Also in the plan: a lounge for international travelers.

This all has to be done while operating airport business as usual.

To accomplish that, spots in the two high-ceilinged atriums would be outfitted for limited food and-beverage service, pre-security. And, the existing row of restaurants and retailers in the non-secured area would first be relocated to the concourses.

Because even more room is required for this super-checkpoint area, the walls on the second floor also would be bumped-out to expand the terminal further into the airfield side.

The main goal of this renovation: Slash passenger wait times at security screening checkpoints during peak hours in the peak season months – without overbuilding for reduced passenger demand during the rest of the year.

 Secondarily, port authority officials believe it will reduce the need for extra, in-season TSA staffing.

Also, they expect concession revenues will rise, because most shops and restaurants now in the pre-security area would relocate to beyond the checkpoints, where fliers spend more time and dollars.

Walt Justice, a health care consultant who flies from here on business, hasn’t endured the occasionally epic lines in February, March or early April, which might stretch from checkpoints into the atriums and around the corner, to the ticketing area.

That’s probably because Justice doesn’t need to depart between noon and 1 p.m., the hour identified as RSW’s year-round peak.

But he loved the idea of more food-and-beverage options, post-security.

He’s a Delta customer, and says choices on Concourse C are limited.

“I don’t want to eat and then go through the checkpoint. I want to go through security, eat … and then get on the plane.”

Port Authority numbers for the fiscal year ended Sept. 30, 2017 show gross receipts for food and beverage sales averaged $1.11 per departing passenger from the pre-security concessions – and anywhere from $4.41 to $5.43 per outbound passenger on the concourses.

Non-food retailing averaged 98 cents per passenger land side, with averages ranging from $2.74 to $3.68 on the concourses.

The port authority gets a cut of the concessions revenues, which funds operating the airport.

Projects like the terminal expansion typically are funded through state and federal transportation department grants – and airport-earned revenues. No property tax dollars are involved.

Among U.S. airports, Southwest Florida Internationa encounters some of the biggest seasonal swings in passenger demand and air service.

In March, the airport has 125 percent more takeoffs and landings than in September, its slowest month.

By comparison, the airports in Orlando and Tampa have about a 30 percent change between season and non-season.

In preliminary studies, Atkins Global, an engineering firm hired to design the expansion, hypothesized about an April 1 in the future when departing passengers would increase by 23 percent or nearly 3,600 passengers over present levels, during the peak hour of noon to 1 p.m.

 If more security screening lanes aren’t created, Atkins Global’s analysis showed that extra passenger demand could bring wait times exceeding two hours in some lanes, during peak travel times in peak season.

And, even where the wait times weren’t that long, most lanes in most concourses would exceed TSA’s preferred wait times of no more than 20 minutes in a standard line and five minutes in a PreCheck line.

“That’s certainly not acceptable,” Mulder said.

Expanding to accommodate more screening lanes isn’t unusual. Many airports have done it or are planning it  – from Newark to Boston to Grand Rapids, said airport spokeswoman Victoria Moreland.

RSW will average 9 percent more airline seats year-over-year in January through March of this year.

More seats or capacity typically brings more passengers.

Although the expansion will be challenging, Mulder noted that even if everything comes together as planned, “we’ll have operational challenges for four more (tourist) seasons.”

Source: Naples Daily News


Toppled Trees are Saved at Wonder Gardens!

Hurricane Irma uprooted and severed the roots of hundreds if not thousands of trees throughout Southwest Florida this past September.  Landscapers have cleared  away almost all of the debris from the roads and yards to return Naples to its beautiful appearance that we all cherish.

A historical place in Bonita Springs, Wonder Gardens,  has dozens of trees dating back to the 1930’s and earlier. Some were saved and some sadly were put to rest.  A banyan tree that had been planted before World War II soared higher than the rest of the surrounding trees was luckily saved five weeks after Irma tore through the gardens. Young trees can be purchased and planted for $2,000 to $5,000, but would take decades to get to the size of any surviving trees.

The owner, Al O’Donnell, seems very optimistic. He says that the trees are known to grow back with little or no roots at all. “Wonder Gardens should return to its attractive appearance in about two years”, he said.   In a about five summers, you won’t even be able to notice what happened.   The job O’Donnell and his crew completed could have cost the nonprofit Wonder Gardens about $31,000.  O’Donnell said choosing to volunteer was easy.  “(The Wonder Gardens) is an icon for downtown,” O’Donnell said. “It was the right thing to do.”

Source: Naples Daily News

Free Trolley for Naples Beaches

Great News! Beachgoers will be able to skip the meters, the stickers and circling for parking spaces this season in North Naples!

Collier County will start a free beach trolley, its latest effort to find a cheap solution — and one that doesn’t involve more pavement and higher parking garages — to alleviate overflowing parking lots and backups during the busiest times of the year. The county is hoping it will meet with more success than a little-used trolley last year that followed a less desirable route and wasn’t free.

Starting Dec. 29, anyone will be able to hop on the trolley for free as it circles between Vanderbilt Beach and Delnor-Wiggins State Park. The trolley will travel from the two beaches, across Immokalee Road, and go a mile-and-a-half along U.S 41, where it will stop near Mercato before cutting back to the beaches.

The route will be short enough for the trolley to circle back to each stop every 15 or 20 minutes, said Michelle Arnold, director of alternative transportation for the county.

The trolley will head into the state park to dr op riders off dir ectly at the beach. The park charges a $2 entry fee, which will be collected from trolley riders who get off at the Delnor-Wiggins stop.

County officials hope the trolley proves convenient and popular enough to make a dent in the number of people who line up at the Vanderbilt Beach parking garage or sit in traffic at the entrance to Delnor-Wiggins park, waiting for a spot to open.

This season, the trolley will run in the mornings and evenings around sunset to carry riders during the busiest beach times.


Naples’ First Luxury Urban High Rise 


TRIO will soon become Naples’ first luxury urban high-rise, combining elegant condominiums, luxury hotel apartments, world-class amenities, dining options and specialty shoppes. Poised at the entrance to 5th Avenue South and soaring nine stories above downtown Naples, TRIO will offer residents an exclusive living experience in one of 24 contemporary residences built above 48 extended-stay hotel apartments. There is a special place in the Florida sun for everyone at TRIO.

On the ground floor of the tower, TRIO will offer seven commercial locations, including shoppes and restaurants and fitness studio.
Perfectly positioned on the 2nd through 5th floors, the fully-equipped extended-stay luxury hotel apartments –from 1,180 to 1,490 square feet in size – feature full kitchens, modern furnishings and a washer and dryer.

The 24 Residences – located on the 6th to 9th floors – will range from 1,180 sqft to 2,560 sqft in size. They will offer spectacular spaces with a sense of refined elegance, opening seamlessly through floor-to-ceiling windows, accommodating panoramic views of downtown Naples.
The four penthouses on the 9th floors will feature Lutron lighting systems, an electric auto curtain system, and surround-sound entertainment.
Other facility features include signature aromatherapy systems in common areas, state-of-the-art technology, and a parking garage with private enclosed spaces for condominium owners with several restaurants and retail location just an elevator ride away.

TRIO combines modern visionary architecture with truly unique features and amenities, plus unmatched service levels. Bathed in Florida sunshine, TRIO residents will enjoy the very best of Naples – with unobstructed, panoramic views of the world around them – including Naples Bay, the Gulf of Mexico, Gulfshore Boulevard and downtown Naples just footsteps away. We appreciate your interest and look forward to making your experience at TRIO extraordinary and unlike any other lifestyle.


Airbnb: Will insurance pay for guest injuries?

Of course no one really thinks about if they will get injured on a vacation.  In all actuality, an injury is probably is the last thing someone would think about, but it is a possibility.   A polled survey done by Assurant found that 63% of 1,000 homeowners were unsure as to whether or not if their homeowners’ insurance policy would cover vacation renters.

Home-sharing through sites such as Airbnb has grown in popularity, and experts predict that growth in vacation home rentals could hit 25 percent this year, up from a 19 percent increase in 2016.

However, experts agree that homeowners need to understand their homeowners’ insurance policies – what is excluded and what is covered – particularly in the event of damage or injury.

The biggest gap in understanding when it comes to home-sharing protection is the commercial-use exclusion clause and gaps in coverage. Most insurance companies will deny claims related to home-sharing based on the commercial-use exclusion clause in the homeowners’ policy, though each insurance company approaches the exclusion in a different way. Some policies will cover “occasional home-sharing,” for example, which is often not well defined.

Many home-sharing platforms offer built-in insurance policies, but that coverage may or may not include damage to a neighbor’s property; theft of jewelry, electronics, and other valuables; identity theft, or liability for personal injury to guests.

Insurers should be proactive in communicating to owners the various regulations and laws being enacted by cities and municipalities related to home-sharing activities, including any related to requiring insurance, as well as what policy customizations may be available.

Source: PropertyCasualty360 (07/24/17) Malhotra, Kunal, FloridaRealtors. org, News & Events

A study done reveals that clients don’t always pick the best-looking agent…

Gee…this is great news. Of course I figured this out years ago when I was a rookie in 1983! Hey, interest rates were 17 and 18 % then…be happy NOW!

BOCA RATON, Fla. – Oct. 18, 2017 – Think being attractive and using lots of superlatives to describe a property helps a real estate agent succeed?

According to recent research published by the American Real Estate Society (ARES), that thinking may be off the mark.

The study, published by ARES in the Journal of Housing Research, was conducted by Michael J. Seiler, Ph.D., of the College of William & Mary; Aaron Arndt, Ph.D., and Mark A. Lane, Ph.D., both of Old Dominion University; and David M. Harrison, Ph.D., of the University of Central Florida.

“Seiler’s work in experimental real estate is ground-breaking, as we can now begin to see buyers’ decision-making process for the first time and how it influences transaction outcomes,” says Ken Johnson, Ph.D., real estate economist at Florida Atlantic University’s (FAU) College of Business, ARES publication director, and co-developer of the Beracha, Hardin and Johnson Buy vs. Rent Index.

The researchers investigated whether customers’ overall impression of online property listings can be influenced by the real estate agent, and whether this influence depends on the customer’s demographic characteristics. A sample of 1,594 potential homebuyers took an online audio/visual tour of a typically priced home in their area. Subjects were shown one of eight conditions in which the researchers varied agent gender, agent attractiveness and pathos (enhancing the verbal description of the property with superlatives).

The results show that segments of customers are drawn to different real estate agents – but contrary to expectations, customers were not necessarily drawn to similar agents or more attractive ones.

The study found that:

  • targeting customers with the same demographics is not necessarily an effective marketing strategy
  • agent attractiveness does not entice customers in a way that is consistent with the customer’s sexual interest
  • There is no significant difference by gender or marital status

In addition, agents that enhance their verbal description of the property with superlatives influenced some subjects positively and others negatively.

“Our study shows that an agent’s physical attractiveness, similarity to the prospective home buyer, and use of pathos influences the overall impression of the home, but not in a consistent enough way to specifically instruct agents to adopt a certain strategy,” Seiler says. “Importantly, adopting the incorrect strategy could very well work against the agent.”

Link to Article

Source: Florida Atlantic University College of Business

© 2017 Florida Realtors



Ever wonder where the rich and famous live in the United States? If you said New York City or Los Angeles, you wouldn’t be far from the truth. But what about Naples, one of Southwest Florida’s poshest cities?

Property research website, PropertyShark, released data this summer on the most expensive ZIP codes in Florida by examining residential transactions closed in 2016.  Naples’ 34102 (Port Royal) was named for being in the top 10 most expensive ZIP codes.

John R. Wood Properties’ agents hold many of the listings in Port Royal, and one of the most expensive homes is a 15,995-square-foot estate at 3100 Gordon Drive for $58 million.

Port Royal isn’t the only area making the list in Naples.  Two additional Naples ZIP codes – 34108 and 34103 – took the No. 13 and No. 15 spots, respectively.  John R. Wood also has an office in Sanibel, which was ranked No. 8.

Here are the other top 10 status-filled codes in Florida:

  1. Miami Beach’s 33109
  2. Boca Grande, 33921
  3. Miami, 33122
  4. Key Biscayne, 33149
  5. Anna Maria, 34216
  6. Naples, 34102
  7. Miami, 33146
  8. Sanibel, 33957
  9. Captiva, 33924
  10. Inlet Beach, 32461