Sometimes it makes sense to keep your mortgage in retirement, sometimes it doesn't. Find out what strategy works best for you.
Some 44% of homeowners ages 60 to 70 carry a mortgage with them into retirement, according to mortgage banker American Financing.
Is that a smart financial move? The decision of whether to pay off your mortgage before retirement should hinge on how much you've saved for retirement, your cash flow and how your investment accounts are performing.
Here's a look at some considerations as you decide whether to continue making mortgage payments during your retirement years. First, read about three reasons to pay it off – then, consider two reasons not to.
1. People Who Are Mortgage-Free Are Happy Retirees
Morgan Hill, CEO and founder of Hill & Hill Financial in Woodstock, Georgia, says it makes “all kinds of sense” to pay off the mortgage before retiring.
“Economically it makes sense from a cash flow standpoint,” he says. “What I find is that the people who are most at peace in retirement owe very few people any money, and paying off that mortgage is a big, big, big part.”
Hill says the exception is the handful of clients he’s come across in his years in the business who have low-interest mortgages and very low mortgage payments. Most have owned their homes for years.
“I can pick on one hand a few that got the deal of the century, low fixed-rate interest with principal, interest, tax and insurance, $650. That's almost a car payment,” he says. Click HERE to read more.