Good question. You’re getting ready to retire in a few years. You have a fairly nice house, accompanied by a fairly large mortgage. Should you pay it off?
For: Paying it off will give you more money to spend in retirement. You’ll have money sitting around and available if you sell your home, which you’ll probably do eventually anyway. And houses traditionally increase in value over the long term, so you’ll receive more than if you had put the money in the market.
Against: Housing prices are going down. Who knows what your home will be worth when you want to sell it, and you might not get full value, which means you could have used that money in the market for a better return.
Another factor to take into account is whether you are using pre-tax money to pay off the mortgage. Probably not a smart thing to do. Here’s one opinion from InRich.com.
I guess the decision depends on:
A. Your estimation of housing prices at the time you want to sell.
B. Your need for keeping your monthly expenses low.
I don’t know the tax benefits/drawbacks involved. If anyone knows, share with the rest of us, please.
Tags: baby boomers, housing values, retirement planning
Entries (RSS)