retirement_readiness

Why you should pay off your mortgage BEFORE you retire

August 28, 2012

Can you imagine being debt free when you enter retirement? Many people work very hard to pay off their auto loans, credit cards bills and other monthly payments before they retire. Doing so allows you to enjoy those retirement years without the added financial burden or stress.
However, most people overlook the option of paying of their single largest debt….their mortgage!

With interest rates being at an all-time low, many people often overlook the benefits of paying off their mortgage and assume that it won’t make that big of a difference in their overall financial plan for retirement. However, if you consider the many advantages that come with being mortgage free, you might just change your tune!

1. Emotional peace of mind – Owning your home outright reduces stress, and that is what retirement is all about.

2. Instant equity – Look at your home as an additional savings account. Once you have paid off your mortgage the value of the home is very similar to cash in your savings account.

3. More mobility – Without a mortgage you have complete control over where you want to live. If you choose to downsize later in life, or purchase a beach getaway, you have more mobility in making these decisions if you don’t have a mortgage to reckon with.

4. Maintain your cost of living – After you retire, your income will probably drop, but your cost of living won’t. Some expenses, like health care, are likely to climb — perhaps significantly. If you can eliminate the burden of a monthly mortgage payment, you’ll have more flexibility to handle any rising costs.

Retirement signals the beginning of a new lifestyle. The daily grind of working 40 hours a week is gone, the children have grown up and moved on with their lives, and you are free to truly enjoy your life. Having additional financial obligations can take away from this new lifestyle. Make a list of all the wonderful places you want to go and things you want to do during your retirement! If you eliminate the monthly mortgage payment, these dreams are more likely to become realities.


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