Should Retirees Pay Off Their Mortgage or Invest the Money? It Depends on the Math

These days, if you want to pay off your mortgage when you retire, you’re going to take a lot of flak.

That is because mortgage rates are currently at whistle-inspiring lows—the average rate across 30-year fixed loans in December was 2.93%, according to mortgage technology provider ICE Mortgage Technology. If you itemize and get tax a deduction for mortgage interest, you’re paying even less to borrow money.

Meanwhile, if you were to invest the money instead of paying off the note, you’re likely to make a lot more. Over the last 10 years, portfolios invested 60% in stocks and 40% in bonds averaged roughly a 10% annualized return, according to investment research platform Morningstar Direct. On its face, paying off a low-cost loan when you could use that payoff money to grab a higher yield on an investment means leaving money on the table that could be useful in retirement.

Andrew Graham, managing partner of Jackson Square Capital in San Francisco and a J.P. Morgan veteran, is “generally in favor of keeping a mortgage of up to the tax-deductibility limit of $750,000 in retirement,” he said. Even for the risk-averse, he said, it is still fairly easy to put together a low-risk portfolio that can outdo the savings most clients would get from paying off a loan.

But no portfolio can match the no-risk proposition of retiring debt and with it, any anxiety over covering mortgage payments. Here’s what financial advisers say you need to do before you cut any big checks:

OUR body ITSELF is a leased one,how can anyone have a permanent asset that too when THEIR successors r doubtful to upkeep the relationship due2divide2rule POLICIES MADE BY GOVERNMENTS 2DEPRIVE CHILDREN THEIR SHARE in ASSET OF parents if MISUNDERSTANDINGS crops ?

Invest

Answer - They should definitely pay off the mortgage first!

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