Mortgage Debt: Is Paying off your Home Before Retirement Still a Must-Do?

According to a number of recent studies, including the most recent Census data, Americans are carrying mortgage debt into retirement at much higher levels than ever before.

The reasons for the trend are numerous, but one of the most significant factors has been the historically low interest rates of the last decade; many homeowners were encouraged to refinance to take advantage of significant savings on interest. While that may have been a very wise choice at the time, it has resulted in restarting payment schedules all over again, especially if homeowners chose a traditional 30-year mortgage instead of a 15-year product.

Traditionally, it was considered sound, bedrock advice to have one’s home paid off prior to retiring. However, the question is, “Does that conventional wisdom still apply, or should retirees feel perfectly comfortable factoring mortgage payments into the plan for their golden years?”

Here’s my answer

Cookie-cutter advice doesn’t work when it comes to dealing with mortgage debt; each individual situation should be carefully considered. Here are three questions I discuss with my clients when we consider the particulars of their own situation:

Do you have the money to pay off the mortgage without tapping into retirement accounts?

Why it matters: Distributions from traditional retirement assets (IRAs, 401(k)s, 403(b), 457) are usually taxable income. If you take out a large sum, it reduces the funds you have available to generate an income stream. In addition, a large distribution in one year can have significant impact on taxes and Medicare premiums. The bigger the numbers, the bigger the problems.

Does having a mortgage payment bother you? Is it a source of worry?

Why it matters: Being comfortable, confident, and mostly worry-free around your finances is important in retirement. Why retire if you’re just going to sit around the house and worry about whether you have enough to carry you through? If having a mortgage payment is going to create stress, you should consider strategies for paying it off. Ideally, it’s something you have time to work on for many years prior to retirement.

Is it a good decision financially?

Why it matters: When we’re strategizing around mortgages and retirement income, it’s critical to make the best decision possible. We’re usually talking about big numbers when discussing mortgages, like tens of thousands or even hundreds of thousands. The right decision will make a long-term difference. From a financial perspective, you must take into consideration factors like your interest rate, the remaining balance, the funds available to pay off the mortgage, and the cash flow you’ll enjoy with or without the mortgage.

The question of how to handle your mortgage is truly one of those financial questions to which there isn’t a right or a wrong answer. The only answer that matters is the one that’s best for your unique situation.

Remember, a strategy around paying off your mortgage may require time. If you think it’s an important decision for your financial health, work with your Certified Financial Planner™ Practitioner and make a plan sooner than later.


Andrea Blackwelder Financial Planner

Andrea Blackwelder is a Certified Financial Planner ™ Practitioner and the co-founder of Wisdom Wealth Strategies, a fee-based financial planning and investment advisory practice. Andrea looks at your complex financial planning puzzle and assists you with the best options and financial strategies that align with your financial needs. To contact Andrea, email

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