Podcast Episode 172: Mailbag: Variable Annuities, Flipping Houses, and Mortgage Debt

Today’s Wisdom:

The time has come again to open up the mailbag and find out what financial questions are on your mind. Today we get three questions dealing with variable annuity investments, flipping houses for income, and carrying mortgage debt into retirement. Find out what Joel thinks about each of these topics in this episode.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.

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What You’ll Learn:

Questions come in all the time about many different types of financial topics, and we use the podcast as a platform to provide information and answer as many of those questions.

On our latest episode of the Money Wisdom podcast, we open up the mailbag and let the listeners determine the direction of the show. As you’ll hear, we get to three questions touching on some pretty common subjects within the world of investing and financial planning.

Carrying a Mortgage Into Retirement

We can show people in an analytical way that it makes sense to have a mortgage payment in retirement, but it all comes down to how comfortable you are with debt. If you don’t like having debt and it gives you security paying it off, then that’s likely the path you need to take. But there are benefits to carrying a mortgage in retirement, including cash flow and tax deductions. Either decision could work for you so get feedback from a financial professional to make sure you have a plan for whichever way you go. 

Flipping Houses

Joel knows a lot of people that have gotten wealthy doing this or teaching people how to do this. For most people, the idea sounds better than it works out to be. That’s not to say you shouldn’t buy houses, renovate them, and make a profit. But go into it knowing it’s a full-time job if you want to do it well and you have to know what you’re doing. So to answer this listener’s question, Joel wouldn’t recommend flipping houses as the main investment strategy for most people.

Variable Annuities

A listener has a variable annuity that provides a nice income guarantee but keeps hearing that this is a bad investment idea. Let’s start with the cons. They can be very expensive and even more confusing to try and figure out where the expenses are. If you have mutual funds and you’re trying to make money on them, but you have 2.5-3% fees, it takes a while to make money. Now having said that, there are some variable annuities out there that have very attractive income guarantees. Joel shares an example of a client that got a great return off his investment so they can be beneficial.

Too many people will share an opinion without much knowledge or understanding of a product so don’t get rid of your annuity until you sit down with an advisor who can assess your situation.

As always, we offer a complimentary Money Map review for you so we can help answer your questions in more detail if you prefer. You can call or email us as well so don’t worry about someone on the other end giving you a big sales pitch. That won’t happen if you reach out to set up a meeting.

[0:21] Mailbag Question: We have an opportunity to refinance at a lower rate but it would be a 15-year mortgage and we only have 5 years left to pay now. It seems like a bad idea to have a mortgage heading into retirement. What do you think?

[1:23] Mailbag Question: What’s your opinion of flipping houses as an investment strategy?

[4:59] Mailbag Question: I have a variable annuity that seems to have a nice income guarantee associated with it, but I have heard many people say variable annuities are usually a bad deal. What am I missing?

[7:49] – A Money Map review will help get your questions answered.

Thanks for listening to this episode. We’ll be back again next week for another show.

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Final Thoughts:

“If you refinance that mortgage and take a longer period of time, you’ll lower your payment most likely and you’ll have more cash flow. And also, you’re getting a tax deduction on your interest.”

– Joel Johnson, Money Wisdom Podcast

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