Should You Try To Be Mortgage – Free in Retirement?

During 1-on-1 401k consultations, we often run across this question:

Should I get rid of my mortgage before retirement?

In a word, YES.

The reality is that the higher your “personal overhead,” the more of your nest egg you have to drain to pay those expenses. Additionally, advances in medicine and science is keeping us around longer, so our retirement needs to last longer, thus the less we have to spend will help make it last that much longer.

The following is an excellent article from Robert Powell, retirement columnist on Marketwatch.com on the subject:

Don’t Carry Your Mortgage into Retirement – Robert Powell, Marketwatch.com

That, by the way, is the typical analysis most financial experts would do if you asked them whether you should carry your mortgage in retirement. Can you earn more on your mortgage than on another investment, risky or not? At present the answer is clear: A 5% mortgage offers a bigger bang for your buck than a 2% CD.
It’s also better to pay down your mortgage if you have to borrow to invest in risky assets, such as stocks that invest in China and your brother-in-law’s latest hot tip. And another good reason to pay down your mortgage: You don’t want or need a mortgage payment should calamity strike and you’ve already spent down your nest egg going to the 1,000 places you must visit before you die. In that case, you might die homeless.