Do You Want to Pay Off
Your Existing Mortgage?
Good Morning Relaxing Retirement Member,
Carrying a mortgage during your retirement years goes against the grain of years and years of conventional thought.
The mere thought of maintaining a mortgage can become psychologically draining for some. It just feels wrong.
This is what leads to the common question I receive, “should we pay off our existing mortgage”?
This is a really good question which has no cut and dried answer to it.
My answer always involves asking a lot of questions, so I thought I’d share those with you today in the hope of helping you arrive at a good answer given your unique set of circumstances.
To begin with, I find that folks ask this question for many different reasons.
One of them stems from the dogmatic belief that you should never have a mortgage in retirement! It was drilled into their minds growing up and it has never left.
That may actually be a very good belief to carry around in the majority of situations. However, it’s certainly not an absolute as you’re about to discover.
Let’s take a look at some factors you’ll want to consider when evaluating if you should pay off an existing mortgage you have.
Factors to Consider
Another smaller factor, but still important, is maintaining some liquidity. If you will have to use up all of your liquid funds to pay off your mortgage, you may want to give some thought to that.
The final Factor stands alone because it’s something I’ve discussed many times with members.
We can make all of the financial and economic arguments in favor or against keeping an existing mortgage (like in the examples above). However, at the end of the day, if you have knots in your stomach, or you just can’t stand making mortgage payments, or if being “debt free” has been your lifelong goal and you have the means to pay off your mortgage, just go ahead and pay it off.
I’ve suggested this in several situations. I’m a big believer that you have to be able to sleep at night.
Finally, you’ll note that I’ve reserved my comments for evaluating paying off an existing mortgage. I have some thoughts about entering into a new mortgage in retirement which I’ll share with you on my next Retirement Coach Strategy of the Week.
Committed To Your Relaxing Retirement,
The Retirement Coach
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I appreciate the trust you place in me. Thank you! (The content of this letter does not constitute a tax opinion. Always consult with a competent tax professional service provider for advice on tax matters specific to your situation.)