Many homeowners both young and old have grown up with the notion that paying off your mortgage before retirement is the best way to do things. If everything is timed just right, the mortgage will be completely paid off before the age of 65, and retirement will be a lot more manageable.
This concept works well, but more and more people still carry mortgages past the retirement age. The question of whether you “should” pay your mortgage off before retirement or not is a personal one, but here are a few reasons for and against it.
Reasons to Pay It Off
One reason to pay it off early is because if you are focusing your financial efforts on the mortgage, you’re probably spending less in other areas. You’ll be able to figure out your needs and wants a lot easier and saving money will be easier, too.
Choosing a shorter, fixed term mortgage with the thought of paying it off sooner will help you save a lot of interest during the life of your mortgage and you may have to buy a smaller home to make it all work. A smaller house usually means lower maintenance costs, lower property taxes and lower utilities, which is money you can direct toward your retirement savings.
The “one less thing to worry about” angle is also valid when it comes to your mortgage and retirement. That’s not to say you’ll automatically start slipping in the cognitive department during retirement, but being debt free is a wonderful feeling anytime. You’ll also want the choice to have a job to be a choice and not something you have to do to make ends meet.
Reasons Not to Pay It Off
There are also reasons not to pay off your mortgage before retirement. Some of the reasons you may want to keep your mortgage include; having high interest rate debt on cards or loans that you’d do better to pay off first, the possibility that you may need cash at some point before retirement or if you’re getting tax breaks on your mortgage interest.
In most cases, freeing yourself from your mortgage as soon as possible is the best way to go. But if you have money or debt in other places, you may end up saving in the long run by waiting. Look into the situation closely before making a decision and then take action and get the process started.