There's a commonly-held belief that it is a wise idea to try and have your mortgage paid off by the time you retire. But even if this is feasible, is it necessarily desirable? Some experts think that it could be a good thing to hold off paying off your mortgage come retirement age.
If you’re nearing retirement, your interest rate may help you decide whether to keep paying mortgage bills or pay it off in full. If the mortgage interest rate is quite low, it might be preferable to avoid pay off mortgage options and keep the cash instead for other purposes.
In particular, if you have other debts with higher interest rates than your mortgage, instead of paying your mortgage off, it would make sense to clear some of those debts with higher repayments, to prevent them from escalating.
When making mortgage decisions, think about how you are getting on with building up your retirement savings. If you are falling short on your retirement accounts, and are still eligible for topping them up, this could prove a good opportunity to boost your savings income, tax-free.
Instead of choosing to pay off mortgage, consider if there are any other alternative investment options that could well be worth your while. With the money you don't use to pay off your mortgage, you could invest in a range of stocks and shares, for example. Try to maintain a diverse portfolio, however, so you don't keep all your eggs in one basket.
Another reason why you might not choose to pay off your mortgage before retirement is if you are considering moving property. Many people choose to downsize when they retire, so you may be able to make the move without using any of your savings.
Keeping hold of the cash instead of paying your mortgage off also provides a safety net if you need emergency funds for any expenses that may crop up.