In the United States, From the moment we start working and start thinking about retirement, we have to take into account many aspects that directly affect our golden years. If we don’t enjoy our retirement years to the full, all the previous work won’t make much sense.
For this reason, the Joint Center for Housing Studies at Harvard University has produced a report where we can discover information about the mortgage debt of retirees. After all, the proportion of retired homeowners has been increasing in recent years.
Thus, if we take into account that 41% of homeowners between the ages of 65 and 79 have a mortgage on their primary residence in 2022, the difference with 35 years ago is brutal. In 1989, retirees in this situation did not reach 24% of the total. Thus, we must bear in mind that citizens with a mortgage and a pension at the same time are more common than they were years ago.
Is it better not to have a mortgage during retirement years?
Taking into account that inflation has increased a lot in recent years, the truth is that mortgages are an enormous burden for all those retirees who have no other source of income. Although it is true that this is the case and that it may seem urgent to pay the mortgage as soon as possible, it all depends on the personal situation of each American.
It is obvious that not having a mortgage during retirement years is a huge advantage. But it is also true that each citizen has a different financial situation. And, furthermore, we must take into account several aspects related to mortgage payments before retirement.
According to an analysis by Redfin, the mortgage rates of many Americans are less than 4%, which means that this money can be much more useful in an investment fund or a retirement account to generate returns.
What we want to say is that yes, it is important to pay off the mortgage as soon as possible, but not just any way. If we have to take our lifetime income from our retirement account, it is not worth eliminating the mortgage. If we talk about a long period of time in which our retirement account is available, the money we will get will be greater than if we take the money and pay the mortgage.
That’s why knowing our retirement plan is key to being able to face our golden years in the best possible way. Likewise, knowing the conditions of the mortgage is also essential. Currently, it is true that mortgages have a much higher rate, reaching 7%, but older mortgages, as we have mentioned, are nowhere near that percentage.