Pay Off Your Mortgage By Age 65
Being a recent first time home-buyer, my final mortgage payment is comical to think about. And this is exactly why many people don’t think about actually paying off their mortgages, ever. The Washington Post recently reported that, “more than 55 percent of boomers who have mortgages do not plan to pay their mortgages off until their 70s, if ever.” I always just assumed that by the time I reached retirement, I would own my place. But this figure really sheds negative light on the idea of upgrading homes.
Its typical now for homeowners to upgrade their homes by taking their earned equity and trading it up for a bigger better place (although the likelihood of this in the near future is not as good.) Arguably, this trend of trading up is a bad idea in more way than one. For example, the seller has to shell out closing costs to buy a new home; pay roughly 5 percent of their previous homes value to a realtor in commissions; furnish a bigger home; insure a bigger home; and likely face higher property taxes.
Trading up, especially at older ages, forces many to pay mortgages well into their retirement years. Is this something we should try to avoid? I think it is. Although you can argue that the tax benefits of owning a home allows you to pay less to the IRS each year, which could ultimately free up some cash for other investments. The reality, in my opinion, is any money freed up is being spent usually everywhere but on investments. Facing a mortgage in retirement is a great way to run out of money later on. Regardless of how the market is, a monthly payment is due. In bad market years, a lot of your retirement income principal is being spent to cover your mortgage, which is only suppose to happen later in retirement.
Overall, I think setting a goal of paying off your mortgage by the age of 65 is more than reasonable. If this means downsizing your living quarters after retirement, I think it may be worth the lifestyle change. The idea of outliving your mortgage scares me and I’m troubled to learn that so many baby-boomers are facing that prospect. $
Related articles you might be interested in:
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader or email.
I *think* and hope that we’ve topped out on the “bigger is better” concept of home buying that we’ve seen over the past 20 years. I think the downsize and conservative approach is taking over.
If so, then I think people will be able to pay their homes off quicker..and definitely sooner that 65. I plan to at least…although I doubt I’ll pay it off earlier than the 30 year term. With the rate and tax advantage there better things I could be doing with my money. Of course, if I cover all those other bases then the mortgage will be paid down sooner.