Should You Pay Off Your Mortgage Before You Retire?

While it’s true that not every Baby Boomer will retire at a specific age, every month more than a quarter-million Americans turn 65. Age 65 has traditionally been an accepted retirement age – although many people don’t actually retire until they are 70 years or older. Regardless, the debate on whether a person or couple should have their mortgage paid in full by the time they reach the age of 65 or 70 is ongoing.

Should a person or couple continue with the burden of making mortgage payments once they stop working? The answer to this question is not a definite yes or no in either direction. Whether or not a person or couple wants the responsibility of mortgage payments after retirement is a decision that must be made on a case-by-case basis.

If you know that you will be able to afford to make mortgage payments after you retire, there is no reason that you should not live in a home that requires a loan. However, if you are not sure if required mortgage payments will put you in a negative financial situation after retirement, you should consider paying your mortgage in full before you retire. Or, you may want to downsize into a more affordable home following your retirement.

Following are additional factors to consider when thinking about carrying a mortgage after retirement:

  • Owning a home outright during retirement alleviates stress and provides homeowner(s) with peace-of-mind during the years you are supposed to be relaxing and enjoying life.
  • If you have consumer debt, consider the fact that you will have to make monthly payments on your debt until it’s paid in full. Will you be able to pay monthly mortgage payments plus all of your other debt obligations?
  • How do you feel about carrying debt during your retirement years? Even though mortgage interest rates are currently quite low, payments are required every single month. If you are on a fixed income during retirement, your mortgage might prohibit you from spending money on other things.

Some people do not have a choice on whether or not to carry a mortgage when they reach retirement age. If you are nearing retirement age and you are nowhere near paying off your mortgage, don’t panic. There’s no reason to believe that just because you are nearing retirement age means you must own your house free and clear. Not everyone owns their home outright the day they turn 65.

For additional advice on whether you should pay your mortgage by the time you retire, it’s important that you schedule an appointment with an experienced mortgage professional. There are many facts to consider when you are nearing retirement age. It’s important to remember that whether or not you want to pay your mortgage in full prior to retirement is a personal decision. There is no right or wrong, and there are plenty of options for making mortgage payments affordable after retirement.

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