Why You Should Pay Off That Mortgage Before You Retire

If you planned on retiring soon you’ve probably had to readjust your expectations. But even if you’re still on target to take it easy soon, you should reconsider until you’ve paid off your mortgage.

Chicago Tribune columnist Gail Marksjarvis — who hopes to retire in a couple years — says despite conventional wisdom, the tax shelters mortgages offer don’t make up for what you’ll likely lose on interest unless your investments soar.

The lack of a house payment makes it far easier to enjoy the good post-career life, Marksjarvis writes:

Some retirees think they should keep making mortgage payments for the tax deductions. But Park Ridge, Ill., financial planner Gary Bowyer said retirees often are subject to low tax rates, and avoiding mortgage interest is a better deal than the deduction. Even without a mortgage deduction, you can claim the standard deduction on taxes – $11,400 for couples this year.

Bowyer recommends racking up an emergency savings fund of up to $48,000 and dividing investments between stock mutual funds and bonds.

Also, be sure stock up on pants that you belt up above your belly, you know, just to keep the tradition going.

It’s wise to pay off mortgage before retiring [Chicago Tribune, via BND]
(Photo: Ingsoc)