Contrast to what financial planners have traditionally recommended, a Fox Business News article suggests that it might be more beneficial to not pay off one’s mortgage before retirement.
“Traditionally, financial planners have recommended paying off a home before retirement,” the article writes. “But some experts say it can make financial sense to enter your golden years with a mortgage.”
The key driver is looking at what the mortgage costs them after taxes, according to one expert quoted in the article.
“If you are able to earn a higher after-tax return on your investments than the mortgage is costing after taxes, then economically, you should keep the mortgage,” a Senior Director of Planning at Wells Fargo Private Bank told Fox Business.
Another expert suggests that homeowners who had refinanced over the last few when rates were at record lowers might want to consider retaining their mortgage in retirement, saying they would “almost be foolish” to pay it off.
Since each borrower comes from different financial backgrounds, experts still suggest weighing all the aspects, both financial and emotional, before tackling a decision that has a lot of moving parts.
Read more a Fox Business News.
Written by Jason Oliva