A new federal report says one-third of retirees now have a mortgage. That is virtually unprecedented in American history.
Historically, when people turned 65, the majority of them would have been mortgage debt-free. But that scenario is changing.
Having a mortgage in retirement may or may not be a danger signal.
When you shouldn’t pay off your mortgage…
I’m often asked by those with mortgages in their 50s if they should double down in their efforts to pay off that mortgage by retirement. As someone who hates debt, you might expect that my answer would automatically be “yes.”
But there is an exception to that rule: If you have 15 years or less until retirement and still have a mortgage that’s longer than 15 years, *and* you have not managed to save a sufficient amount of money for retirement, it is my belief that saving for your future should be your priority.
I want you to do a Roth IRA, which you can fund up to $6,500 annually when you’re over 50. Or be sure you’re picking up the full match on your 401(k) at work.
Many people who took out mortgages during the recent years did so when mortgage rates were very low. As a general rule of thumb, if you have a mortgage with an interest rate below 4%, paying that mortgage off by retirement is a lower priority than saving like a maniac so you have money to live on in retirement.
Of course it would be better to have no mortgage. But life isn’t always perfect.
So if you’re setting priorities and have a low interest rate, that mortgage being paid off is not the highest priority. Unless you’ve saved like a maniac and have massive amounts of cash for your retirement years.
ARTICLE: Should I Pay Off My Mortgage Early?