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#5 of Series

Writer's picture: Jeff BernierJeff Bernier

I’m nearing retirement, should I pay-off my mortgage?

If I buy a new house, should I finance it?


As with many questions regarding finances and retirement, whether to have a mortgage in retirement depends on your situation. Being debt free in retirement can bring additional “peace of mind” and could be more than just a mathematical decision. It has been my experience that often retirees who are mortgage free can weather unexpected expenses as well as market volatility with more confidence. Without debt, you might be able to have a portfolio with more equity exposure and thus higher expected returns (albeit with additional risk). However, being mortgage free may not be feasible for everyone.


If you are nearing retirement, there are several factors to consider when considering paying off your mortgage or financing a new home purchase.


  1. Income: How is your income in retirement structured? If you have high pension income and Social Security income, your mortgage payment may easily continue to be covered in retirement. With those income sources, you may also qualify for a mortgage in retirement.

  2. Balance sheet: Your financial resources and how they are structured may impact your ability and decision regarding a mortgage. If your financial resources are not sufficient to pay down the mortgage or purchase a home without one, then focus on the appropriate mortgage product for your circumstance. If you have substantial financial resources but they are all in tax deferred accounts such as IRAs and 401ks, the tax impact of pulling a large amount out may not make this a prudent option.

  3. Other considerations are current interest rates and how long will you stay in a house. If you have a low interest rate and can support the monthly payments, keeping the mortgage as is may make sense. A low fixed interest rate mortgage on a home might also be a reasonable inflation “hedge”. In an environment with higher mortgage rates, financing a new home may have a bigger impact on your long-term financial stability. If you are planning on moving in the near term, it may be better to wait on paying off the mortgage till there is clarity on the financial impact of the new home.


Should you have a mortgage in retirement? It depends! A qualified financial advisor may be able to help. We encourage you to find a guide.


Important disclosures here: bit.ly/3MbScI5

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Jeff Bernier is the sole Member and an investment adviser representative of TandemGrowth Financial Advisors, LLC, (“TandemGrowth”) an investment adviser registered with the U.S. Securities and Exchange Commission. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that TandemGrowth has attained a certain level of skill, training, or ability. No person will receive cash or non-cash compensation, directly or indirectly, in exchange for an endorsement of this book. Any endorsement of the book, ‘The Money and Meaning Journey’ are endorsements of the book and are not endorsements of Jeff Bernier’s reputation or experience as an investment adviser representative of TandemGrowth, or of TandemGrowth itself. The information presented in this book is general commentary intended to inform its readers, including current and prospective investors, about the broader financial ecosystem. All profits from the sale of this book are ultimately paid to the Bernier Family Gift Fund at the National Christian Foundation, which makes charitable distributions to various qualifying nonprofit organizations. Except for the “Contact Page,” the book is not intended as an offer of Mr. Bernier’s or TandemGrowth’s advisory services related to the sale or recommendation of securities. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of TandemGrowth’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a tax strategy, investment strategy, and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by TandemGrowth, will be profitable or equal any historical performance level. Additional information about TandemGrowth, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and currently at https://adviserinfo.sec.gov/firm/summary/125490.

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