Should You Pay Off Your House Before Retiring?

Most people hope to purchase a home during their lifetime, and a large portion of them succeed. In today’s world, the average homeowner is around 32 years old. With a 30 year loan still being the most common mortgage taken out, that places the average time for paying off a home at 62 years. Things do happen, however, and a few missed payments or placing a loan on hold for emergencies (a rare but possible occurrence) could place that loan a few years past 62 – which also happens to be the earliest age people can retire and begin drawing social security benefits.

If someone doesn’t purchase a home at 32? Populations living below the poverty line or saddled with large amounts of student loan and credit card debt often have to wait longer before they can make their dream of purchasing a home a reality. If that 30 year mortgage loan isn’t obtained before a person turns 37, they can’t pay off their loan prior to full retirement (and social security benefits) at age 67 – unless they make early payments.

But does this even matter? Is it necessary to pay off your house before retiring, or is it okay to make payments in your post-working years?


Paying Off Your Mortgage Pre-Retirement is Preferable

If it’s at all possible, most experts recommend doing away with any large debts before you enter retirement. In addition to your mortgage, this includes any car leases, student loan debt, or credit card debt.

The reason you would ideally have all your major debts paid off is that it decreases your overall cost of living when entering into retirement, which sets you on a fixed income. This stretches the money you’ve saved for retirement so that you can live comfortably.

Let’s say, for example, that your utilities average $500 a month, and your groceries (for two people) averages $400 a month. During your working years, you also have a $1,200 monthly mortgage payment, $200 monthly car payment, and $100 in various debt reduction payments. Eve if you have to stretch your budget a little thin for a few months, or even a year, making early payments to get rid of at least two of those debts can significantly lower your costs of living. Ideally, you would pay off your mortgage before anything else, as this is the largest payment for most people.

Having A Mortgage Isn’t Always A Financial Death Sentence

If there is no plausible way to pay off your mortgage before you retire, it isn’t always a financial death sentence. You would need to account for those payments when planning your finances, however, which increases the amount of money you’ll need to save.

Even if it isn’t totally paid off, those who are nearing retirement should aim to have as few years left on their mortgage as possible. This way, you will only have to really stretch your budget for a short number of years before you’re able to enjoy your hard-earned and well-deserved post-working years more thoroughly.