ພະນັກງານບໍານານຄວນຈ່າຍຄ່າຈໍານອງຂອງເຂົາເຈົ້າບໍ?

Paying off the mortgage after 30 years, followed by retirement, used to be a rite of passage for many. This scenario is no longer the norm: Baby Boomers, Americans born between 1946 and 1965, are carrying more mortgage debt than earlier generations at this life stage and are less likely than generations before to own their homes at retirement age, according to research from Fannie Mae’s Economic and Strategic Research Group.

Whether it makes financial sense for retirees or those nearing retirement to pay off their mortgage depends on factors such as income, mortgage size, savings, and the tax advantage of being able to deduct ດອກເບ້ຍຈໍານອງ.

When to Continue Making Mortgage Payments

Monthly mortgage payments make sense for retirees who can do it comfortably without sacrificing their standard of living. It’s often a good choice for retirees or those just about to retire who are in a high-income ວົງເລັບ, have a low-interest mortgage (less than 5%), and benefit from tax-deductible interest. This is particularly true if paying off a mortgage would mean not having a savings cushion for unexpected costs or emergencies such as medical expenses. 

If you’re retiring within the next few years and have the funds to pay off your mortgage, it may make sense for you to do so, particularly if those funds are in a low-interest savings account. Again, this works best for those who have a well-funded retirement account and are still left with substantial savings for unexpected expenses and emergencies.

Paying off a mortgage ahead of retirement also makes sense if monthly payments will be too high to afford on a reduced fixed income. Entering retirement years without monthly mortgage payments also means you won’t have to withdraw funds from your retirement account to pay for them.

Avoid Tapping Retirement Funds

Generally, it’s not a good idea to withdraw from a retirement plan such as an ບັນຊີເງິນກະສຽນວຽກສ່ວນບຸກຄົນ (IRA) or 401(k) to pay off a mortgage. If you withdraw before you turn 59½, you both incur taxes and early-payment penalties. Even if you wait, the tax hit of taking a large distribution from a retirement plan could potentially push you into a higher tax bracket for the year.

It’s also not a good idea to pay off a mortgage at the expense of funding a retirement account. In fact, those nearing retirement should be making maximum contributions to retirement plans.

Over the past several years, research has shown that the majority of people are not saving enough for retirement. In a September 2018 report, the National Institute on Retirement Security revealed that more than half (57%) of working-age people don’t have a retirement account. The report adds that even among workers who have accumulated savings in retirement accounts, the typical worker had a modest account balance of $40,000.

Strategies to Pay Off or Reduce Your Mortgage

You can use a few strategies to ຊໍາລະການຈໍານອງກ່ອນໄວອັນຄວນ or at least reduce your payments before retirement. Making biweekly payments instead of monthly ones, for instance, means that over a year you’ll make 13 payments instead of 12.

ທ່ານ​ຍັງ​ສາ​ມາດ refinance your mortgage if doing so would help shorten the loan and lower your interest rate. Although it could be helpful in the long run, refinancing could also hurt your net worth. Remember, a mortgage new or old is a liability to your household, subtracted from a household’s assets.

If you have a larger home, another option is downsizing by selling your home. If you structure the sale correctly, you might be able to buy a smaller home outright with the profit from the sale, leaving you mortgage-free. However, the pitfalls include overestimating the worth of your current home, underestimating the cost of a new home, ignoring the tax implications of the deal, and overlooking closing costs.

Although paying off a mortgage and owning a home outright before retiring can provide peace of mind, it’s not the best choice for everyone. If you’re a retiree and or a few years away from retirement, it’s best to consult a financial advisor and have them carefully examine your circumstances to help you make the right choice.