The overwhelming majority of homeowners who maintain a traditional, forward mortgage payment indicate that the pressure that regular payment places upon their finances makes it very difficult to adequately save for retirement. This is according to a new survey recently conducted by Bankrate.
“This figure includes 31% who say the mortgage has a major negative impact on their ability to save and 46% who say it has a minor negative impact,” writes Bankrate’s Jim Royal on the survey results. “The remaining 23% of survey respondents say their mortgage has no negative impact.”
While homeownership is a key financial goal for many Americans, it can create financial issues in other areas if not managed properly, according to the survey results.
“Big mortgage payments take a bite out of your monthly income but are also a major obstacle to saving for retirement, emergencies, or other financial goals,” says Greg McBride, Bankrate chief financial analyst in the report detailing the survey results. “Homebuyers, beware of biting off more than you can comfortably chew and locking yourself into payments that make it difficult to save.”
The survey also found that among all homeowners, roughly 39% have more equity in their homes when compared with money saved in retirement accounts such as 401Ks or IRAs. Surprisingly, these figures are “nearly the same” for both homeowners who had an existing mortgage on the property or owned the home outright, Royal says.
The negative impact on the ability to save also affected people at multiple levels of yearly income. For surveyed individuals who reported an income of between $30,000-$80,000, the percentage of respondents reporting some kind of difficulty in the ability to save ranged from a low of 76% to a high of 80%.
“So even a higher income is not offsetting the ability of a mortgage holder to afford the payments and not negatively affect their savings,” Royal writes based on the data.
Seniors reported a less difficult time saving for retirement because of an existing forward mortgage, but nearly three-quarters of surveyed respondents between the ages of 56-75 reported that the mortgage payment impeded their ability to put money aside for retirement.
Read the survey results at Bankrate.