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Planning for a Mortgage-Free Retirement

| August 06, 2019
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How to Plan for a Mortgage-Free Retirement

You’ve decided to explore a mortgage-free retirement. Now, how do you get there? Here are plans, strategies, and other strategic advice from financial experts and industry insiders on the best means of achieving that goal.

Daniel Grote is a Certified Financial Planner, Behavioral Financial Advisor, Partner with Latitude Financial Group, and possesses over 17 years of experience in the financial planning profession. Grote advises that his clients should focus on paying off their mortgage after clearing a few other financial hurdles. He offers this step-by-step advice:

  1. First, fully fund an emergency fund with three to six months of your non-discretionary fixed expenses.
  2. Next, pay off all non-mortgage debt.
  3. Direct 15% of your household income to tax favored retirement plans such as Roth IRAs, 401(k)s, and SEP IRAs [Simplified Employee Pension Individual Retirement Account].
  4. Finally, fund a 529 college savings [account] when children are involved.

Once those tasks are complete, you can direct any extra funds toward paying off your mortgage. Overall, it’s a statement of the obvious to say that retirees who don’t have a mortgage live more comfortable, stress-free retirements.

One of the biggest challenges tax pros have given for maintaining a mortgage rather than paying it off is the loss of the mortgage interest deduction. However, as a below-the-line deduction, it has become less likely to be beneficial with the tax law changes enacted at the end of 2017, which substantially increased the standard deduction and sharply reducing the number of people who benefit by itemizing on their returns.

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