We’re often asked for tips on how to create a successful retirement. We think this such a great question that we’re devoting a new column to this topic. In each newsletter, you’ll find one “tip” we’ve found to be invaluable on the path to retirement victory. We hope you enjoy the information.
– Pay off the mortgage when, or BEFORE, you retire.
The importance of this tip simply cannot be overstated. Put simply, this can make or break your retirement reality.
Why? Consider this: what is your single biggest bill each month? If you’re like a majority of Americans, it’s probably your mortgage. Now imagine having less income each month, but still having to pay that big bill. A little scary, isn’t it?
But what if you didn’t have to pay that bill anymore? Could you live on less income and still feel comfortable? Probably. That’s why it’s so important to pay off the mortgage BEFORE you retire.
If you are not yet retired, but have a target retirement date in mind, check and see if your date aligns with the payoff date for your mortgage. If it doesn’t, what can you do to fix it? The answer could be surprisingly simple.
Paying a little extra every month could make a significant difference, especially over time. You could also get ahead by making an extra payment each year. Or changing from a monthly payment to a bi-weekly schedule.
Any of these adjustments should also help you pocket some extra savings in interest – even in the current low-interest rate environment. Who doesn’t like to save money?
Of course, extending out your target retirement date is an option, as well, and may be the most realistic if your budget is currently unforgiving. But don’t automatically fall into the “I’ll never be able to retire!” camp. Making some smart adjustments to how you pay your bills each month could result in a surprising difference.
Here’s a link to a mortgage payoff calculator which clients have found useful.
Want more info? Please call me!