When a mortgage is part of your retirement plan
There is no mistaking how Eric Markowitz feels about borrowing money: “I hate debt,” he said. Markowitz, a dentist in Washington, took out a mortgage to buy a home for his family, but that’s the extent of his borrowing. And he fully intends to have it paid off by the time he retires in 15 years or so. “I sleep better knowing I have limited debt,” he said. “I just don’t like owing people.”
Like Markowitz, Bill Malloy has been thinking about retirement planning a lot since turning 50 a couple of years ago. But after running a small business for nearly three decades, he’s comfortable carrying debt. “There really isn’t a good reason” to focus on paying off his mortgage, said Malloy, a partner in a Virginia education consultancy. “We’re locked in at a historically low rate, and I like to have some flexibility and liquidity.”
Who’s right? Both of them, according to the financial adviser they share. “I am a fan of living without debt,” said Ted Halpern, a Washington-area fee-only financial planner. “However, we’re looking at interest rates that are unbelievably low. I can understand why someone would want to borrow at those rates and invest that money elsewhere.”
Whether to carry mortgage debt into retirement is a perennial hot topic among financial advisers and their clients. Home loans tend to be Americans’ largest liabilities, so their care and handling has a profound effect on how we experience life as retirees.
The best approach for you depends on how you feel about debt — and a handful of other factors. Among them: your age, how much money you’ve put aside for retirement and where it’s invested, and even how disciplined you are about saving and spending.
Mortgage debt used to be far more attractive for many Americans, but revisions to our tax laws have changed that....