Debt repayment

Is It Okay To Keep Paying Your Mortgage After You Retire?

Your financial life is affected by retirement in various ways. Since you won’t receive a paycheck anymore, you’ll have to rely on other income sources like savings and Social Security.

Additionally, there’s a significant probability that once you leave the workforce, you’ll be living on a fixed salary with less money in your pocket. You should continue working when you still have a lot of debt because retiring requires you to stretch a smaller income further.

If you have a mortgage debt, you should ask yourself these questions to determine whether retiring before you pay it off will make financial sense.

1. How will a mortgage change your monthly spending plan?

What effect will your mortgage have on your capacity to make ends meet? This is the first important question to ask yourself while determining whether or not to retire with a mortgage.

Consider your savings growing at a safe withdrawal rate and the money you will receive from Social Security. Consider delaying loan repayment until retirement if your mortgage consumes too much of it and leaves you short on cash.

2. Can you cover your mortgage even if something terrible happens?

If you have a mortgage on your home, you must ensure you can still manage it even if things don’t work out as you had hoped. When you are retired and unable to find employment again, facing foreclosure is terrible.

You want to go through this as you attempt to recover from the harm that losing your home creates. Consider whether you have an emergency fund that could cover housing bills if you suffer additional unforeseen expenses that deplete your retirement income to lessen the likelihood of losing your home due to a future inability to pay.

Also, consider if you’ll be able to continue paying your bills if your retirement investments don’t perform as well as anticipated.

Suppose you are worried about losing your home in the future. In that case, consider delaying retirement until you have paid off your mortgage and are the sole owner of the house, at which point you won’t have to worry about making monthly loan payments.

3. When will your loan be repaid entirely?

If you’re near paying off your mortgage, having a few months’ worth or even a year’s payments as a retiree might not be a big concern.

However, if it is a while before your loan balance is zero, you should wait to quit your job. As you age, a lot may go wrong quickly, including the emergence of expensive health problems.

Ideally, you will only have to continue making payments on your home loan after you stop working because that will be another significant financial burden for you to manage.

4. What other options do you have?

Of course, you must also consider your other options when considering whether to retire with a mortgage. Working until your loan is paid off could be a solution, but this is only an option if there are no positions available, you have health problems, or you’re just ready to quit your job.

A significant shift in lifestyle may result from downsizing to a home you can afford without a mortgage. To understand which course of action is best for you, compare these possibilities against one another and the advantages and disadvantages of retiring with a mortgage.

Benefits of Paying Off Your Mortgage in Retirement

Over the long run, residential real estate should underperform a properly diversified investment portfolio. Refrain from letting the real estate returns over the past few years deceive you.

Single-digit annual rates of return have historically been the norm for residential real estate. Still, diversified portfolios often perform significantly better over the long term and should be reasonably expected to do so in the future.

Additionally, because mortgage interest is tax deductible, adopting this form of leverage can be done at a lower cost, boosting the return on investment of the securities you purchase.

Finally, a single property may be deemed fully undiversified from an investing standpoint, which is bad news if it accounts for a sizable amount of your net worth.

Maintaining both financial stability and mental stability requires diversification.

Drawbacks of Carrying a mortgage into Retirement

Despite the apparent advantages, this tactic may potentially have some negative consequences. As previously indicated, obtaining a mortgage is another example of leverage.

By employing this method, you effectively raise the exposure of your assets, including your home and your other investments. Your financial situation becomes significantly more complicated, and your overall risk exposure rises.

Additionally, the returns on your investment will change over time. Long-lasting declines can be frightening and challenging to control.


Several variables affect how safe it is to keep paying your mortgage when you retire, and the choice to prepay a mortgage is frequently motivated by emotional factors. Although it may help you sleep better at night (which is vital), serenity won’t pay for a lengthy retirement.

Therefore, weigh the value of future flexibility before using extra money or an unanticipated windfall to pay off your mortgage early. After all, objectives frequently shift over time. So, plan accordingly.

Author Bio: Attorney Loretta Kilday has more than 36 years of litigation and transactional experience, specializing in business, collection, and family law. She frequently writes on various financial and legal matters. She is a graduate of DePaul University with a Juris Doctor degree and a spokesperson for Debt Consolidation Care (DebtCC) online debt relief forum. Please connect with her on LinkedIn for further information.


Vlad graduated from National Technical University “Dnipro Polytechnic” in Ukraine. He joined PocketGuard in April 2021 as a customer support manager with strong communicative skills. Vlad is respons...

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