should i pay off my mortgage before retirement or invest

Should I pay off my mortgage before retirement or invest?

When it comes to managing your mortgage as part of retirement planning, the general recommendation is to pay off your mortgage before retirement. This helps reduce expenses and eliminate debt, which will provide peace of mind in your later years.

However, if you are lucky enough to have a very low interest rate, it may be worth considering an alternative strategy: investing the money you would use to pay off the mortgage. This approach is only effective if the returns on your investments exceed the mortgage interest rate, and it’s crucial that you don’t spend the difference. The goal is to leverage the low interest rate to potentially grow your wealth.

Additionally, changes in tax laws, such as higher standard deductions, mean that the tax benefits of mortgage interest deductions may no longer be as advantageous for many homeowners. For these reasons, paying off your mortgage is often the safest route, but in certain situations, investing the mortgage payment can be a viable option.

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Shawna Theriault, CFP®, CPA, CDFA®
Senior Financial Advisor, Wiser Wealth Management

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