Should You Pay Off Your Mortgage Before You Retire?

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If I pay off my mortgage , at least I have a home when all goes South. If I loose my investments like my 401K etc. I might be left out in the cold.

Terri of CA 7:40PM May 22, 2012

The 'tax savings' argument for not paying off a mortgage early has always been unfounded. People who believe it are simply uneducated in regards to finances. Following the traditional methods of the so-called ‘financial experts’ is what has created 15 TRILLION DOLLARS in Federal debt as well as 15 TRILLION DOLLARS in new personal debt in America. The system is set up to enslave us financially, period. My wife and I were introduced to the system at www.Paxeon.com a couple years ago and it has literally changed our lives. Everyone discouraged us, but guess what, so far we’ve saved more than $48,000 on our mortgage, without paying a dime more out of our pockets and will have an extra $379,000 for retirement. The ‘experts’ can keep their advice.

Richard of ME 6:55PM March 27, 2012

The big issue is paying off mortage or contributing to 401K.
My wife and my jobs are very stable, meaning we have a very low chance of losing them in the future. With our jobs we both receive large pensions (Education) and with the large Pensions it wouldn't be as crucial for us to invest in IRA's. What are your thoughts on trying to pay off our 300,000 mortage with a 5% Interest rate???
Struggling with this thought and a lot of the responses don't include pensions.

Dale of PA 8:46PM March 03, 2010

The point that most miss when touting the mortgage deduction is that one should only include the interest deduction that excludes the standard deduction. Using $10,000 in mortgage interest gets absolutely nothing in tax savings for a miarried filing joint return, as they already have a standard deduction that exceeds the mortgage interest. So you wind up paying $10,000 interest for the mortgage and essentially save $0. Maybe the mortgage interest would benefit a little if it took the total deductions to, for example, $16,000, but it is still spending a lot to save a little. When we paid off our mortgage several years ago I received the same kind of "advice" from a planner about the tax deduction. When I asked him about the standard deduction and why he was using the total interest instead of using only the amount over the standard deduction he remained silent. That was when I fired the adviser and paid off the mortgage.

Tom of CO 1:44PM January 09, 2010

Elementary math shows you are money ahead by paying off your mortgage. ONLY AFTER:
1. All other debt is paid off first(cars, credit cards, consumer loans, etc.)
2. You have 3-6 months of EXPENSES saved in an emergency fund.
3. You are investing at least 10% of you income into a 401K or Roth.
Steps 1, 2, & 3 have to be done one at a time and completed in that order. Don't start 2 until 1 is done....
Here is the math: For EXAMPLE
Let's say you have mortgage and are paying $10,000 per year in interest on that loan.
Assume you are in the 25% income tax bracket.
You would be able to write off $2,500 or 25% of the $10,000 you paid in interest on you mortgage.
So, what you are doing is paying $10,000 to the bank so you can get $2,500 tax break at the end of the year.
For those of you who think this is a good deal, I'd be happy to take $10,000 of your money and then give you back $2,500.
Bottom line, pay off your outstanding debts (and don't accumulate more).
Save 3-6 months of your household expenses in a rainy day fund.
Invest 10% of your income in either a 401K/457/403 Roth etc.
And then pay off that damn mortgage! Think of the money you would have each month if you had no car loans, credit cards, or a house payment....

Mike of TX 11:24AM November 24, 2009

Paying off your home is the right thing to do. Do the math! You’ll find that if you pay taxes rather than paying interest, you are way money ahead. Also, if the money is in your house ( paid in full) instead of in the market and the market crashes, guess what you still have your home. The reverse of the aforementioned would be you’ll still have a mortgage and your money will still be depleted from a market downturn. I’m not implying not to invest, I do! What I am saying is invest what you can afford to lose. The banks have the population brain washed when it comes to paying off you home plain and simple. Remember they make money on the interest. Investors side with the banks too because they make money when you invest. Financial freedom is exactly that, freedom!

Kent B. of CA 7:16PM July 24, 2009

What is the advantage of paying off a $35,000 when you are 72?

Janet DePasqual of FL 6:38AM July 16, 2009

The only thing I can think of preventing someone to pay off $30000 mortgage is that you won't have any rainy day money left after that. Otherwise, pay it off. You cannot get any significant tax break from the interest anyway.

harry of CA 6:18PM June 24, 2009

Please HELP!
I'm one of the Americans that did it right. Pay my taxes, put my money in a 401(K), save before indulge etc. I have the ability to payoff the mortgage on my co-op without going into my 401(k) and without hurting my savings account. The people that I've spoken to say don't pay off the mortgage because I already don't get that much of a tax break.
Here are the numbers:
remaining on apt. mortgage - 85K
monthly payment - $577
terms - 30 yr. @ 6.25%
savings - 125K
I'd like to pay it off but am still conflicted.

TR ROSS of NJ 4:16PM April 12, 2009

I'd like for author Emily Brandon (and USN&WR) to re-interview the Nancy and Claude Jones to see if they have different view about the wisdom of paying off the mortgage in view of what has happened in the past four months. Is Claude still enjoying seeing how his investment account is doing?

CB of TX 2:15AM January 27, 2009