Financial Retirement Planning


Carrying a Mortgage into Retirement

Carrying a Mortgage into RetirementThirty percent of Americans 65 years and older are carrying a mortgage into retirement and trying to figure out how to handle the payments. No one really wants to carry a mortgage into retirement, however in many cases it can just not be avoided. There may be health issues that take a lot of money, there might have been a divorce or separation, there may be children’s education to pay for or maybe you just spent too much and did not plan properly.

In many cases, consumers have been laid off from a well paying job and find themselves unable to find another job, effectively putting them into retirement. Whatever the reason, carrying a mortgage into retirement can be difficult for some and at the very least it will limit the things you plan to do during your retirement.

Cash flow is all important in retirement. The bottom line is that there is only so much money coming in each month, your expenses will eat into that income. Your mortgage that you carry into retirement will eat into this cash flow along with your expenses for living, visiting the grand kids etc. If you are young enough to plan in advance, make every effort to repay your mortgage in full prior to retirement.

You will have all of the cash you need to live your life. Many people will use a line of credit to help them deal with situations where they do not have the cash to handle various situations. While these are excellent tools, there is the danger of using them and then finding that you cannot pay them off quickly since the cash is just not there.

Carrying a mortgage into retirement

Folks in this situation haveĀ  much less flexibility in spending due to the cash flow impact. That $400 or $800, whatever the mortgage payment is, is money that you don’t have to enjoy in your retirement.

Other pressures such as putting students through university, unemployment, retiring early, health expenses etc. can affect your ability to repay the mortgage. Even if you have a line of credit against your home which you consider a loan, make sure that it is fully paid before you retire. We see lots of people spending a lot of money in the years before they retire to upgrade the house, buy a car, major repairs to their home etc. If you have the cash to pay these major expenses great, if not make your cash last as long as possible to avoid serious cash flow issues.

Pay off high interest loans first, then focus on low interest mortgages. By taking this approach you can at least minimize the amount of interest you are paying each month.

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