Is paying off your mortgage a good retirement plan?
- RICKLv 71 month ago
Better than owing a mortgage in retirement
- STEVEN FLv 71 month ago
Paying off your mortgage before retiring is a good PART of your plan. It IS NOT even a bad retirement plan.
- LLv 51 month ago
As long as you stay in the house - yes, because then you have no mortgage payments anymore - leaving you more money to live on.
- n2mamaLv 71 month ago
Retiring without having a mortgage payment is a good plan, as the mortgage payment/rent is generally the biggest expense people have. If paying off your mortgage would take money out of investment accounts to do, however, it might not be the best plan.
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- Christin KLv 71 month ago
Yes and no.. You can reduce your overall debt load, sure; but where is the money to pay off the mortgage coming from? Retirement savings or accounts? In that case, not necessarily. What or where will your income be after retiring? How will you live day-to-day? How will you be able to handle emergencies?
Remember this: as you age, your medical needs increase, and may eventually take all your assets to handle. If you own your house, and need to go on Medicaid for medical bills, your house will be seized to recover the amount Medicaid will pay out. You'll lose the house, in other words. Once you pay off your house, you CAN give it to your kids--AS LONG AS YOU DON'T DO THIS IN ORDER TO AVOID MEDICAID recovery. In other words, you must give away your assets prior to NEEDING to.
You can also then SELL the house--and use the money to do something else--downsize to a smaller home, travel, or set up trusts for your kids.
If you want, you can use the equity in your home to make needed improvements--whether or not it's paid off. So there are a lot of factors involved here. No, it's not always a good idea, but it's not always a BAD idea either. It really depends on your individual situation, and a financial advisor can help you figure it out. There are more options than simply either paying the mortgage or paying it off.
- Anonymous1 month ago
I paid cash for my house. But, it's a good question. Reasonable to think you can earn more than your interest rate in stocks over the long run though.
I love not paying rent or a house payment though. Might depend on your age.
- babyboomer1001Lv 71 month ago
It's usually a very good retirement plan because you will save a bundle on interest that you won't be flushing down the toilet and, since the house has been paid off, you will have that much more money to spend how you like, instead of making more mortgage payments.
- Wayne ZLv 71 month ago
It should be one building block of a retirement plan.
However, even with a paid off home, relying on just Social Security isn't going to give you much wiggle room.
- DON WLv 71 month ago
It can be one ingredient of a retirement plan, provided that paying off the mortgage doesn't take away too much of your retirement savings.
- PearlLv 71 month ago
i think its a good plan