Created: November 6, 2022
Modified: November 7, 2022

Episode 82: Is It Alright to Have a Mortgage During Retirement?

Heath Grossman, CFP® here for Money Wisdom Question Series. The question of the day is: Is it alright to have a mortgage during retirement? In previous generations, it was normal to pay off your home before retiring. Just as in those days, working for one company until you retire was also commonplace. But things have changed now and that’s not necessarily the case anymore.

While it’s not impossible to have a mortgage in retirement, it’s important to make sure you can cover all your expenses and still live the lifestyle you want. For some people, that includes having a mortgage; for others, it doesn’t.

Why it may make sense to keep a mortgage in retirement:

  • Mortgages can free up cash flow in retirement
  • May help keep taxes low
  • Can provide a source of income in retirement
  • May help to preserve home equity

Why it may not make sense to maintain a mortgage in retirement:

  • Mortgage payments can be a burden in retirement
  • Can put a strain on other retirement income sources
  • May not be able to deduct mortgage interest from taxes in retirement
  • Home equity may not be needed for other purposes

The major question for those with mortgages is whether they have a sufficient income. Can pension, Social Security, and investments provide enough earnings to cover the mortgage in addition to other living expenses?

If you’re nearing retirement and still have a mortgage, it’s a good idea to speak with a financial advisor. We can help you create a custom Money Map and a plan to pay off your mortgage before or during retirement. We can also offer guidance on whether it makes sense to keep your mortgage or sell your home and downsize.

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