Mortgage debt is a major financial burden undermining retirement security for millions of Americans. The statistics show that nearly 10 million homeowners aged 65 and older (representing about 46% of senior homeowners) struggle with mortgage debt after retirement. While this senior debt issue remains a growing problem, experts are concerned that they’re now making up the largest share of homeowners in debt. Although paying off mortgage debt before retiring hasn’t proven feasible for everyone, there are some smart ways to retire without this burden. So, are you young or nearing retirement? Try these tips to eliminate your mortgage and retire peacefully.
- Start making extra mortgage payments
You can start making extra mortgage payments as soon as possible. It doesn’t have to be significant additions, but a few payments here and there can eat out years on your total mortgage payment and add up to thousands of dollars saved on your interests. There are two main ways you can achieve this. First, find extra income sources, from side gigs to selling valuable things you don’t need. The second option is to find practical ways to cut down on your household expenses and save those tiny amounts to add to your mortgage payment.
- Determine your retirement income
If you find yourself approaching retirement age with a mortgage still staring at you, there’s still something you can do to help you retire your mortgage in time. The first step involves identifying your retirement income and your target date and aligning them with your mortgage payoff date. Also, consider all your cash flow sources, financial resources, and other assets to determine if you have enough money to fund your retirement.
- Scale down
Scaling down can be a financially rewarding move regarding mortgage payments when nearing retirement. After determining your retirement income and realizing you may not have enough to meet your mortgage payments, you can scale back to a more economical home. This is an excellent option if your children are out of the house and you’re left with a massive property that’s difficult to maintain.
Scaling down offers several advantages in terms of flexibility. First, you can use the equity you already built up on your current home to downsize to a smaller home at little or no financial cost. Also, downsizing to an economical home means you can significantly cut down your mortgage payments.
- Consider other living arrangements
Sometimes, it’s best to rethink your living arrangement if you’re too close to retiring. For example, you can consider moving to a cheaper city to retire or move in with your kids. Alternatively, you can plan with your children to take over the ownership and mortgage payments of the house while you retire. That will help if your adult children are yet to find places of their own. However, proper estate planning is required to make this arrangement worthwhile.
If you love your home too much to leave, perhaps you might want to try getting a housemate. This way, you and your housemate(s) can plan a way to share the mortgage equally.
