Years ago, by the time most people reached retirement, their home was paid off, which helped them avoid the burden of a mortgage in retirement. If that's not the case for you, you're not alone. Today, the oldest baby boomers (born between 1946 and 1951) are less likely to have paid off their homes than previous generations. 1Another study revealed that 44% of 60- to 70-year-old homeowners are carrying mortgage into retirement, and 32% expect it will take them more than eight years to pay it off. 2Your mortgage is a factor in your retirement income plan and can affect your quality of life. Should I pay off my mortgage after retirement? is an important question for many retirees.
When paying off your mortgage may make sense
There may be good reasons to pay off your mortgage. It can save you thousands of dollars in interest, depending on the current size of your debt, and give you peace of mind that no matter what happens in the future, you own your home outright. Paying off your mortgage may make sense if:
- You have substantial retirement savings, especially if the funds you'd be withdrawing are in a taxable account and are not earning much interest.
- You're downsizing. If you're planning to sell your home for a smaller one, you can apply the equity to your new home, resulting in a modest mortgage or perhaps no mortgage.