Should you pay off your bond before retirement? Here's what to consider

Stephen Grootes is joined on The Money Show by financial advisor and Co-Founder of Galileo Capital, Warren Ingram.

Listen below

Many people grapple with financial decisions that will impact their future stability as retirement approaches. 

One key consideration is whether to own a paid-off home before retiring.

Ingram says while the answer varies based on personal circumstances, there are compelling reasons for and against paying off a bond before giving up work.

"You have to look at both sides of the coin...it might be that you make a great lifestyle decision that isn't the best financial decision."

Warren Ingram, Co-founder - Galileo Capital

Ingram says the mistake people often make is seeing their house as an investment rather than an asset.

Moreover, he says most of us don't 'track' our investment.

House prices tend to track the movement of inflation.

"Actually, your house is probably not a great investment if you bought it 30 years ago. If you look at the price, all that's happened is the compound effects of inflation."

Warren Ingram, Co-founder - Galileo Capital

Ingram admits there is great comfort in owning one's own home but says that sometimes it can be better to rent a property.

"In the last five or six years, the little silent assassin cost of homeownership have started to rise very quickly - things like sewarage costs or property taxes, refuse collection and the like."

Warren Ingram, Co-founder - Galileo Capital

Another pitfall, says Ingram is never owning a property long enough to reap any financial rewards.

"Rotating houses on a regular basis is just making the estate agents very happy, you're making the lawyers happy, and then property transfer taxes as well...buying every five years, you're really going backwards quite quickly."

Warren Ingram, Co-founder - Galileo Capital

Ingram says 'scaling down' once your home no longer serves you is the ideal way to go.

Once you're sure you are an 'empty nester', owning a smaller property which costs less to maintain is a smart move.

"Buying a home into your retirement makes a lot of sense to me. You're buying stability which is important and youre buying something which is correctly sized for you and your state of life."

Warren Ingram, Co-founder - Galileo Capital

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