Retirement Mortgage

Thirty percent of Americans 65 years and older are carrying a mortgage. Those that are not carrying a mortgage into retirement, may also be carrying lines of credit. Perhaps also car loans or other debt. Either way, these are monthly payments and debt that they could probably do without. These debt payments affect us in multiple ways. They make it much more difficult to enjoy life, perhaps even manage to meet all of your commitments. When they get in the way of putting food on the table or even heating your home, they can cause a very serious situation.

Retirement Mortgage, Lines of Credit – Cash flow

Cash flow is all-important in retirement. Most people are on a fixed income during retirement with pension income and income from savings. If you’re going to take on a mortgage during retirement or carry one into retirement you need to make sure that your cash flow will support this monthly cash expense. If you are on a fixed income with little likelihood of your income increasing chances are that you are actually falling behind. With inflation, every $100 buys less and less every year in terms of real purchasing power.

Carrying a mortgage in retirement means less flexibility in spending due to the cash flow impact. Mortgages carry a fixed interest rate for the most part. Lines of credit and other loans carry varying degrees of interest rates. If you can figure out a way to retire that mortgage or that loan, this step will provide you with a substantial automatic raise. These payments are no longer required and are available to use for other purposes.

Other pressures such as putting students through university, unemployment, retiring early, health expenses, etc also seem to be finding their way into retirement years. Many people decided to have families later in life. This meant that their children were still in university when it was normally time to retire. If you feel that this is part of your future start setting money away now. Make sure that these costs are all covered by the time your children are ready to go to school at a well-known university or college.

Pay off high-interest loans first, then focus on low-interest mortgages.