Carrying Mortgage Debt Into Retirement
I was brought up with the wisdom that paying off your mortgage as soon as possible was the surest way to accumulate wealth. But a new study says there is no longer a stigma to carrying mortgage debt into retirement, at least for folks with plenty of money.
A survey of 500 affluent baby boomers born in 1948 by investment management firm Bell Investment Advisors found that 55 percent who have both mortgages and investable assets of at least $1 million do not plan to pay off their mortgages until their 70s, if ever. "Contrary to conventional wisdom, mortgages can actually be a wealth-building tool for boomers throughout their retirement years," says Jim Bell, founder and president of the company.
Some financial advisers recommend that you keep mortgage debt and invest the money you might have used to pay it off in equities. With any luck, you might earn a higher return than your mortgage interest rate while at the same time taking advantage of the mortgage-interest tax break. Other planners recommend the more traditional approach of paying off your house as quickly as possible without sacrificing your retirement savings and an emergency fund.
Here's help in deciding whether carrying mortgage debt into retirement is an appropriate financial strategy for you.
Tags: debt | mortgages | retirement | wealth
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Reader Comments
Are you sure?
Is that why the highest number of bankruptcies right now is our generation of baby boomers...overextended, overmortgaged McMansions, little or no retirement assets yet have an illusion of affluence? How many really have 'investable assets of 1 million"...so how relevant is this article. It will be misread as simply don't pay off your mortgage and crapshoot your retirement away on a questionable stock market.
And...if you are paying more interest on your mortgage then you can earn on investments isn't it smarter to pay off the note (even if you qualify for a deduction) then earn less on investments while paying taxes on the gains?
And the millenials get slammed....geez
Are you sure?
Is that why the highest number of bankruptcies right now is our generation of baby boomers...overextended, overmortgaged McMansions, little or no retirement assets yet have an illusion of affluence? How many really have 'investable assets of 1 million"...so how relevant is this article. It will be misread as simply don't pay off your mortgage and crapshoot your retirement away on a questionable stock market.
And...if you are paying more interest on your mortgage then you can earn on investments isn't it smarter to pay off the note (even if you qualify for a deduction) then earn less on investments while paying taxes on the gains?
And the millenials get slammed....geez
Re:Carrying Mortgage Debt Into Retirement
There are about 110 million households in United States, with 70% of them owned residences. Let's say there are 75 million owned homes. Not all have mortgages, but if 70 million do, and the average mortgage amount on such homes is $200,000, that comes out to a scary $14 TRILLION of mortgage debt in the USA.
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