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Pay Off Your Mortgage, Then Retire

There was a time when people actually paid their mortgage off, burning the paperwork in celebration of that final payment. But the times seem to be changing. As recently as 1992, only 18% of Americans 65 to 74 had any mortgage remaining on their house, but by 2007, that number rose to 43%. There are many reasons why I’m not sporting a “mortgages are evil” bumper sticker. They are a necessary tool to buy a house which will typically cost 2-3X one’s annual income. If you buy a house by your early 30s, you’ll be through paying by your early 60s. That is, if when you move or refinance to a lower rate, you don’t continue to get new 30 year mortgages.
For some, the aggressive paying off of the mortgage, to the exclusion of nearly everything else, has them sleeping better. I think balance is important. Saving tax deferred in one’s retirement account, building an emergency fund, enjoying life. All these should come first. For myself, at 46, I have just over 7 years left on the mortgage, and 8 years before my 10 year old enters college. So, in theory, she graduates when I am 58, and I have the choice to retire or start a second career.
With the mortgage payment usually the highest chunk of one’s budget, I’d not want to get too close to retiring without knowing that payment is behind me.

  • brainy August 20, 2009, 6:30 am

    Couldn’t agree more Joe… While I may not be as “balanced” as you are (I do lean a little heavy on paying down the mortgage over many other things), I also can’t imagine continuing to pay on a mortgage while retired.

  • Alec August 20, 2009, 12:13 pm

    I completely agree with getting you mortgage paid off. I have been with a mortgage excelerator program for the past 13 years. Being unemployed since January, I can not imagine having to pay my mortgage as a retiree. Luckily for me I have been receiving severance pay and have still been able to double up on mortgage payments.

  • mirko August 23, 2009, 10:51 am

    Agreed 100% on this. In my opinion paying off your mortgage should be a top priority when doing your budgeting. It is a lot of money and shouldn’t be left hanging for too long…

  • Canada mortgage rates October 14, 2009, 2:38 pm

    It is important to pay off your mortgage before or on time, but, what is more important according to me is the time factor, i.e. the duration between the mortgage sanctioned and the retirement time. So, get your mortgage accordingly.

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