As they are nearing their retirement age, many Americans are asking themselves: “Should I pay off my mortgage?” For many, a mortgage-free retirement may be the best option.
Carrying mortgage debt into retirement could hurt your financial situation, says personal finance editor Amy Hoak who makes the case for paying off your mortgage before retirement.
Hoak found some interesting numbers:
- The percentage of retired Americans with mortgage debt increased to 30% in 2011 from 22% in 2001 as their median mortgage amount increased by 82% over that time, says a recent report from the Consumer Financial Protection Bureau.
- Older Americans, surprisingly, spend more on home and home-related products and services than on health care, according to a recent report from the Employee Benefit Research Institute.
An important element of successful retirement is having the ability to control your cash flow and a paid off home allows just that, said Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards and proponent of debt-free retirement.
“Suppose I’m a retiree and have a mortgage, a car loan and other debt. It means my ability to adjust what I spend in any given year is restrained,” she Blayney. “If I’m a retiree and don’t have a mortgage or car loan, I have the ability to dial up or down my spending. The degree to which you can do that gives you an edge against market risk.”
Read Amy Hoak’s full article to see why not everyone can afford to eliminate their mortgage before retirement and what to do when your goal is paying it off earlier.
Image by Rhoda Baer
Tags: mortgage-free, pay off my mortgage, retirement
