Based on findings that more Americans are carrying mortgage debt into retirement, a blog from U.S. News Money offers several incentives to the importance of retiring debt-free.
Suggesting that one’s home can be a “safety net” for retirement, one of the benefits to paying off a mortgage is that it enables access to a financial assets like reverse mortgages.
U.S. News writes:
A reverse mortgage allows you to draw on the equity of your home while continuing to live there. The good thing about a reverse mortgage is that it won’t have to be repaid until you move out permanently. It will allow you to stay in your home and have a little income.
It can be a good safety net if you don’t have enough income in retirement. But be sure to research the product thoroughly because the fees can be high, and if you ever move to a new residence the loan becomes due.
Paying off a mortgage before entering retirement could put less financial strain on your savings and also give you a peace of mind, U.S. News writes.
The article also makes several recommendations to consider, such as planning a retirement date, downsizing to a lower cost setting and refinancing your home to a better rate if it does not have a lot of equity.
Written by Jason Oliva