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Should You Pay Off Your Mortgage Before Retirement?

Five takeaways:

1. This article explores both sides of this argument. It is always better to reduce expenses, McKenna notes, but there are times where it may not make as much sense to rush paying it off.
2. While paying off the mortgage early may reduce costs in retirement, it also reduces liquidity. In extreme examples, this can be referred to as being “house poor” as your home has eaten away at your liquidity and burdened your financial situation.
3. However, not having a mortgage in retirement can be beneficial if it reduces overall lifestyle costs and lowers the amount you’ll need to draw from your portfolio in retirement.
4. Don’t be afraid of leverage: Leverage is when your expected rate of return on an investment exceeds financing costs. If you can borrow money for less than an amount you can reasonably expect to earn by investing the funds instead, then it makes sense to keep the loan.
5. There is no shortage of factors that would affect this decision, and it varies from portfolio to portfolio. it is best to work with a financial professional to make the best choice!

From Kristin McKenna at Forbes:
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