Should you pay off your mortgage before retirement?

Finances

For years, conventional wisdom held that you should aim to pay off your mortgage before entering retirement. But today, owning your home outright doesn't make the most financial sense for every retiree.

Research from the Consumer Financial Protection Bureau shows that while homeownership has remained constant over the last decade, the number of older adults holding mortgages has increased (up to 30 percent from 22 percent). The median amount those 65 and older owed on their homes has increased as well, from $43,400 to $79,000 between 2001 and 2011.

While the refinancing boom of the early 2000s, as well as smaller down payments and home equity loans, have contributed to these statistics, a growing number of soon-to-be retirees are reallocating the funds that would have traditionally gone toward paying off their mortgage early.

"You should forget about prepaying your mortgage if you're not maxing out your retirement plans, or if you're saving for college and money is tight," says Jane Bryant Quinn, author of How to Make Your Money Last: The Indispensable Retirement Guide. "You also should not be putting money toward paying off your mortgage early if you have consumer debt, especially high-interest credit card debt."

There's also the question of what interest rate are you currently paying. With 30-year mortgage rates dropping into the 3 percent range, refinancing now may be your smartest move. It allows you to bring your monthly payments down, which means you can allocate more funds to paying off debt or contributing to retirement accounts. There also is some risk in putting all of your financial eggs in one basket—your home—since prices can fluctuate.

"Another benefit to keeping a mortgage is tax breaks for high earners with big mortgage interest bills," says Michelle Hutchison, a money expert from personal finance website finder.com. "In these cases, it could end up being cost-saving to keep your mortgage after you retire."

Ultimately, deciding whether or not to pay off your mortgage before retirement comes down to your current financial situation and your future retirement budget. Speak with your financial advisor about your specific goals and needs, so that you can make the best decision for you.

About Athene Careers 888-266-8489 Individuals Professionals Institutions
Institutions
The institutional channel includes reinsurance and group annuity contracts related to pension risk transfers.
Reinsurance Pension Risk Transfer (PRT)
Investors
Privacy Legal

Annuities contain features, exclusions and limitations that vary by state. For a full explanation of an annuity, please refer to the Certificate of Disclosure or Prospectus (as applicable) and contact your Financial Professional or the company for costs and complete details.

This material is a general description intended for general public use. Athene Annuity and Life Company (61689), headquartered in West Des Moines, Iowa, and issuing annuities in 49 states (excluding NY) and D.C., and Athene Annuity & Life Assurance Company of New York (68039), headquartered in Pearl River, NY, and issuing annuities in New York, are not undertaking to provide investment advice for any individual or in any individual situation, and therefore nothing in this should be read as investment advice. This material should not be interpreted as a recommendation by Athene Annuity and Life Company, Athene Annuity & Life Assurance Company of New York or Athene Securities, LLC. Please reach out to your financial professional if you have any questions about Athene products or their features.

The term “financial professional” is not intended to imply engagement in an advisory business with compensation unrelated to sales. Financial professionals will be paid a commission on the sale of an Athene annuity.

ATHENE ANNUITIES ARE PRODUCTS OF THE INSURANCE INDUSTRY AND NOT GUARANTEED BY ANY BANK NOR INSURED BY FDIC OR NCUA/NCUSIF. MAY LOSE VALUE. NO BANK/CREDIT UNION GUARANTEE. NOT A DEPOSIT. NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY. MAY ONLY BE OFFERED BY A LICENSED INSURANCE AGENT.