What should participants focus on to better their financial security- paying off their mortgage or saving for retirement? According to an article in Kiplinger, financial advisors are suggesting that it’s all a numbers game.
Depending on the interest rates, participants might be better off investing any extra funds on hand and continuing to pay their mortgages into retirement. Credit card debt and other debt charging higher interest rates should take priority, but recent lower mortgage rates have caused some financial advisors to suggest that saving for retirement, if the rate of return is greater than the participant’s mortgage interest rate, should take priority over paying off their mortgage.
All this isn’t to say there isn’t some benefit to the peace of mind participants might gain from knowing that they own their home, lock, stock and barrel. For some participants, no matter the math, carrying a mortgage into retirement isn’t an option they would choose. However, participants should know that there is financial advice supporting the choice to carry a mortgage into retirement. Participants need to evaluate the benefits of peace of mind versus the advantages of higher returns.