Did you know years ago, there was a practice called a “Mortgage Burning Party?” This was done typically around the age of retirement to celebrate you now owning your home free and clear. So it begs the question, should you be mortgage free at retirement?
Refinance & Retirement Age, Quick Look!
First and this fact is undeniable: Retirement savings on average falls short of needed living expenses by almost 42%. So does it make sense to be mortgage free with those statistics? The truth is, in retirement your most powerful financial tool will be your mortgage. However, let’s be very clear about the strategy.
Are we speaking of a reverse mortgage? No. Not that those services don’t have their place in financial portfolios for most Americans at retirement or nearing retirement age. Let’s look at what cash can be used for.
Refinance & Retirement — Just the Facts!
- A refinance of your mortgage, with cash out enables you not to have to touch investments, retirement plans, or insurance policies.
- A new and emerging issue for retired couples is long-term care. If the pandemic has taught us anything, it would appear that nursing or assisted living facilities are not the alternative we once thought. In-home care from a provider is the best care possible.
- Be debt free otherwise. Eliminating your credit cards, auto loans, costly timeshares, RV’s, secondary properties all makes perfect sense here. Consolidate it into one payment.
- Helping family. The retirement generation is facing financial pressure from their kids, unlike any other generation. Many are paying their kids’ bills. A perfect strategy instead of sending them $2000 or $3000 a month would be to pay off their debt, such as their student loans. It then becomes more manageable for you without having a serious impact on your cash flow.
Times have changed. Financial models have changed. Mortgage burning parties are definitely a thing of the past. Bear in mind that you don’t want financial issues when you pass for your family. However, you have worked hard your entire life to enjoy this next phase. A mortgage is a good debt. Debt that will give you financial freedom, unlike earlier in life. You now have options. Use them. We have specialists standing by to help you understand this phase of your “mortgage life.” Let’s put a plan together that makes sense to use this asset for the next 5, 10, 20, or even 30 years.