There was a time (not all that long ago!) that when a couple bought a house, they raised their family in it and kept it until they died.
They never really thought much about paying it off because, in time, it just happened. One day a letter arrived with the deed.
That’s not nearly as common today, and many people find themselves still with a mortgage when it comes time to retire.
So, do they pay it off early or keep making payments during retirement?
Here’s the easy answer: it depends.
Okay, that’s not such an easy answer. Here are some things to consider before you pay off your mortgage
- Where would you take the money from to pay off the loan? If it’s from your IRA or 401k, remember you probably owe tax on the amount you withdraw. So, if you still owe $200,000 on your house, you may have to remove $250,000 (or more) to net $200,000.
- How will the loss of this $250,000 affect your lifestyle in the future? Sure, you may not owe anything, but will you have enough money to meet your needs?
- What interest are you paying on your mortgage? If you can earn more on the $250,000 over time than you’re likely to pay in interest, you may be better off paying off the loan over time.
For many, the peace of mind that comes with being debt-free is quite attractive. Just be sure to consider the math before you act. If you’d like to learn how we help clients make these decisions, click here to schedule a call or call us at 513-563-PLAN (7526).
Regards,
Nikki Earley, CFP®
