Mortgage in retirement?

Many factors determine whether to keep a mortgage after retiring.

Many factors determine whether to keep a mortgage in retirement.

One of the most important financial decisions to consider at this stage of life is whether you should pay off your mortgage before you retire. Believe it or not, there isn’t a one-size-fits-all answer. Here are a few factors to consider before you make this decision.


  • You’ll be strapped for cash: If paying off your mortgage is a stretch and will leave you with very little cash, then you’ll likely want to keep your homeowner’s loan. However, if you have money sitting in a low interest-bearing account, it may make sense to pay off your mortgage.
  • Your other assets are doing well: If the money you would use to pay off your mortgage is already in investments that generate income and appreciate over time at a greater rate than the interest rate on your mortgage, it may be beneficial to keep your mortgage. Th is will allow you to leave your money in investments that are performing well.
  • You have other debt: If you’re carrying other debt, especially from credit cards, you may want to consider paying these off first. More than likely, your mortgage carries a lower interest rate than most other loans. As far as debt goes, a mortgage is about the best loan you can have, especially since the interest on your mortgage can be tax deductible.
  • You have a job: If you’re still working and have a consistent income, there may be greater fi nancial needs and opportunities to consider before paying off a mortgage, such as creating an emergency fund if you don’t already have one. Additionally, contributing to a retirement savings plan such as an IRA or a 401(k) may be a better use of this money at this time, especially if there’s an employer match.
  • You’re thinking about moving: If you’re considering selling your home, it may be better to hold onto your cash to put toward your next purchase.


  • You won’t save on taxes: If you don’t qualify for the mortgage-interest tax deduction, you may want to consider paying it off . Since you won’t receive the tax deduction, paying for the interest makes your mortgage more expensive. The new tax plan also has a higher deduction and limits the mortgage deduction, so it’s important to double check whether you still qualify for the deduction. If it no longer applies to you, paying off your loan may be the way to go.
  • You need a clear head: Some people are just more comfortable without debt. If you find yourself in this category and you have the financial means to do so, you may find you’ll sleep better at night knowing you’ve paid off your debt.
  • You’ll free up future money: Depending on the length of your mortgage term and the size of your debt, you may pay tens of thousands of dollars in interest or more over the life of a loan. Paying off your mortgage frees up that future money, which can be especially beneficial in retirement.

Deciding whether to pay off your mortgage depends on a number of factors, and though everyone dreams of getting rid of debt, it really might not be the best thing for you. Be sure to do your research so you can make a choice that fits your personal financial situation.

Skip Johnson is an advisor and partner at Great Waters Financial, a financial planning firm and insurance agency with locations in Minneapolis, Richfield, Minnetonka, White Bear Lake and Duluth. Johnson appears regularly on Fox 9’s morning news show.