Considering that the average retirement age is approaching 282 and a large number of people have taken out second mortgages or equity lines of credit in recent years, not everyone who is nearing retirement has the option or ability to get rid of that home loan early. But for those that do, there are some things to consider.

Over at Kiplinger, personal finance writer Jane Bennett Clark offers some food for thought to those mulling over what to do with their aging home loan as they approach retirement.

First, you need to look at your other consumer debt, especially credit cards. Even if you don’t have a mortgage with one of today’s record-low interest rates, it’s got to be a lower rate than the standard credit card APR of around 13%. So it’s better to bring any of these higher-interest financial obligations down to zero (while continuing to pay your mortgage, of course), than it would be to just be done with your home loan once and for all.

Clark also advises that you should be using any extra income you have to beef up your retirement accounts, as amassing the money you’ll need to survive during retirement takes priority over ridding yourself of monthly mortgage payments. “Draining investments to pay off the mortgage could leave you house-rich and cash-poor,” she writes.

Another consideration is the interest you’re earning on non-retirement accounts. If you’re investments are returning you a lower interest rate than the rate on your mortgage, you might then want to consider paying off the rest of the loan now. Conversely, if your investments are out-earning your mortgage interest rates, then you’re still coming out ahead — for at least as long as those investments continue to perform well.

“The decision is not just about the math,” explains a CPA. “It’s also about how you’d feel if the plan doesn’t work out.”

Countdown to Retirement: Pay Off the Mortgage?

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