Written by Rachel B.

Your home is likely your largest asset, so it’s natural for you to want to pay off your mortgage before retirement. However, whether or not this is financially feasible will depend on a variety of factors, such as your timeline for retirement, current savings, financial goals, and spending habits.

While paying off your home pre-retirement may seem ideal, carrying your mortgage into retirement may not be a bad idea, especially if you’re making enough to cover the monthly payments. However you should assess your current financial situation and weigh the pros and cons of each option before making any decisions. To help, here’s a breakdown of your options:

The Pros of Paying Off Your Mortgage

Getting rid of your greatest monthly expense can free up cash flow to support other financial ventures and cover living expenses in retirement, which could be especially helpful when you exit the workforce and are living on a lower, fixed income. Paying down your mortgage early can also save you from paying interest over time, offering cost savings in the long-run.

In general, it makes sense to pay off your mortgage early if you have built up enough savings to adequately support your post-retirement needs, such as medical and living expenses. However, you should remember you’ll likely spend more once you have more free time in retirement, so it’s also important to factor in additional spending before deciding whether you’re able to pay off or pay down your mortgage.

If you were to carry your mortgage into retirement, it would only make sense to invest in opportunities if they offered a rate of return that exceeded your mortgage interest. Whereas, if you were to prepay your mortgage, you could begin funneling your money into other financial ventures and low-risk investments, such as treasury securities and bank-insured certificate of deposits, which are guaranteed to yield higher returns once they reach maturity.

If you have accrued enough equity in your home, but lack sufficient retirement savings to pay off your mortgage in-full, you may want to consider alternatives like only paying down a lump sum of the principle or refinancing your mortgage. By refinancing, you may still be able lower your monthly payments and interest rate, or even change your loan type, to help ease financial burden.

The Cons of Paying Off Your Mortgage

Depending on your circumstances, there may be drawbacks to paying off your mortgage before retirement. According to Consumer Reports, many financial advisors advise against prepaying your mortgage for a variety of reasons. For one, using excess cash to pay off your mortgage

leaves you with less cash to put toward living expenses and potential investment opportunities. Dipping too far into your personal and retirement savings can also put you in a tight spot as it can inhibit your ability to save for retirement, college, unplanned expenses, or any other major purchase.

In addition, by prepaying your mortgage, you’ll lose out on the mortgage interest deduction, which means you won’t be able to deduct mortgage interest on your tax return. This may bump you into a higher tax bracket. For many homeowners, the ability to deduct mortgage interest plays an important role in their overall financial and tax strategies, so you may want to consider whether or not you’ll still be able to itemize your deductions, even without mortgage interest.

You should also consider the opportunity cost of putting money toward your mortgage rather than other outstanding debts. In some cases, it may make more sense for you to reap the tax benefits of adding to your retirement plan or paying down debts that may have higher interest rates, such as credit card bills, student loans, and car loans.

Your current life stage can also impact your decision to pay off your mortgage. If you’re nearing retirement, you may want to be more conservative with your money. Instead of taking unnecessary risks by investing in the market, you may want to keep your mortgage instead. That way, you know you’re locked in on a set interest rate and monthly payment without needing to make risky investments.


As you weigh your options, it’s important to be realistic about what you can and can’t afford. By setting reasonable expectations and discussing your options with a financial advisor, you’ll ensure you make the best choices based on your financial circumstances.


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