Deciding whether to pay off a mortgage during retirement involves various factors unique to each individual. Christine Benz’s latest publication, “How to Retire: 20 Lessons for a Happy, Successful and Wealthy Retirement,” delves into this and other significant financial topics through interviews with retirement specialists. As of 2022, homeowners aged 65 and older reported a median home equity of $250,000.
Many retirees are opting to leverage this equity to purchase homes outright, avoiding new mortgage debt. Eliminating mortgage obligations can increase available monthly funds, but this choice hinges on elements such as prevailing mortgage rates and investment gains. Financial blogger JL Collins advocates for paying off mortgages with interest rates at 6% or higher to secure a guaranteed return.
When interest rates are between 3% and 6%, the decision becomes more subjective, relying on individual comfort levels.
Settling Mortgages During Retirement
Ted Jenkin, a certified financial advisor, emphasizes that this choice often leans more towards emotional and psychological factors rather than purely financial ones.
The book also addresses the non-monetary dimensions of retirement. What brings satisfaction during one’s working life may evolve once retired. It’s essential for retirees to reflect on how they’d like to fill their time, not just in terms of leisure.
Retirement paves the way for transformation and the pursuit of new aspirations. Ultimately, there is no universal solution for whether to pay off a mortgage in retirement; it is contingent upon personal financial circumstances and individual choices.
This book seeks to provide valuable insights from experts to assist retirees in making educated financial decisions.
