Carrying Mortgage Debt Into Retirement

Financial advisers disagree on what you should do with mortgage debt.


I was brought up with the wisdom that paying off your mortgage as soon as possible was the surest way to accumulate wealth. But a new study says there is no longer a stigma to carrying mortgage debt into retirement, at least for folks with plenty of money.

A survey of 500 affluent baby boomers born in 1948 by investment management firm Bell Investment Advisors found that 55 percent who have both mortgages and investable assets of at least $1 million do not plan to pay off their mortgages until their 70s, if ever. "Contrary to conventional wisdom, mortgages can actually be a wealth-building tool for boomers throughout their retirement years," says Jim Bell, founder and president of the company.

Some financial advisers recommend that you keep mortgage debt and invest the money you might have used to pay it off in equities. With any luck, you might earn a higher return than your mortgage interest rate while at the same time taking advantage of the mortgage-interest tax break. Other planners recommend the more traditional approach of paying off your house as quickly as possible without sacrificing your retirement savings and an emergency fund.

Here's help in deciding whether carrying mortgage debt into retirement is an appropriate financial strategy for you.