There are few maxims in personal finance more beloved than \u201cYou should have a paid-off house in retirement.\u201d\u00a0 Whether they actually happen in real life or are just the stuff of legend, the dream of a middle-aged homeowner hosting a mortgage-burning party persists. But let’s… Everyone says that I should pay off my mortgage before I retire. What if I can\u2019t? as published on Women Who Money There are few maxims in personal finance more beloved than “You should have a paid-off house in retirement.”\u00a0 Whether they actually happen in real life or are just the stuff of legend, the dream of a middle-aged homeowner hosting a mortgage-burning party persists. But let’s get real. In the hottest real estate markets, a typical thirtysomething dual-income household today has little chance of homeownership.\u00a0 And if you’re single? According to the US Bureau of Labor Statistics, the median annual income for a woman in her mid-30s is about $50,000; that buys you a $200,000 house. There are certainly places where that works, but only a few. (The current median home price in the US is $467,400.) The bottom line is that it is increasingly common for Americans to delay buying a home. According to research published in 2021, the median first-time home-buying age is now 33, up from 29 in 1981. Whether it’s student loan debt holding you back, outrageous home prices, or, more recently, high interest rates, there are myriad reasons why you may be entering the real estate market for the first time with more than a few gray hairs.\u00a0 Paying off that “forever” home before Social Security begins may simply be a fantasy. Are you doomed to a sad retirement of canned cat food? What’s the real goal? Stepping back, a paid-off mortgage has become synonymous with a stable retirement because, for most people, housing is the biggest line item in their budget – followed by transportation and food costs. If you can mostly zero that out (taxes, maintenance, and insurance costs will always remain), your fixed retirement income need not stretch as far. The actual goal, then, is affordable housing; a paid-off mortgage is simply one tactic to get there. Instead of comparing “having a mortgage” to “no mortgage,” why not frame the choice more realistically for those who have decided to delay homeownership into middle age?\u00a0 Either because they could not afford it earlier in their adulthood or simply because they had no previous desire to be homeowners, for many, the more relevant comparison is renting in retirement vs. a mortgage. If that is the choice, then having a mortgage can be a better path to achieving the real goal, i.e., a sustainable, affordable, and predictable budget line item for housing. Buying your first home even as “late” as your 50s allows you to lock in most of your monthly housing cost in retirement.\u00a0 It’s not that your housing costs won’t rise over the years; no one can escape that.\u00a0 But the increases in your housing costs, if you buy, should be more modest than never-ending year-on-year rent increases (assuming that you avoid purchasing a maintenance money pit or a home in the path of repeated natural disasters). While every real estate market differs, the average national year-over-year rent increase from 2017 to 2022 was 5.77%. You could even see a decline in your monthly payment if you can take advantage of falling interest rates in future years. As long as you have the income to support a mortgage application (and the desire to own a home), it is never “too late” to buy your first home.\u00a0 An important cautionary note, though: Size your mortgage payment to your expected retirement income, not your current working-years salary. This may mean you will buy “less house” than your real estate agent and banker want to sell you. I have already bought my “forever” house. Should I make extra payments to pay off my mortgage early, before retirement? Ah, now that is a different \u2014 and prevalent \u2014 question. And like many personal finance questions, there are both math and emotional answers.\u00a0 When your mortgage rate is low, then the numbers are pretty straightforward. If you were lucky enough to lock<\/p>\n","protected":false},"excerpt":{"rendered":"
There are few maxims in personal finance more beloved than \u201cYou should have a paid-off house in retirement.\u201d\u00a0 Whether they actually happen in real life or are just the stuff of legend, the dream of a middle-aged homeowner hosting a mortgage-burning party persists. But let’s… Everyone says that I should pay off my mortgage before […]<\/p>\n","protected":false},"author":1,"featured_media":20,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[],"class_list":["post-21","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money"],"_links":{"self":[{"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/posts\/21","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21"}],"version-history":[{"count":0,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/posts\/21\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=\/wp\/v2\/media\/20"}],"wp:attachment":[{"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/incomefrominternetmarketing.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}