Household CFO · Episode 05 · Written guide
Should you pay off your mortgage before retirement?
The mortgage rate matters. So does what happens to your cash after the payoff.
Illustrative examples. These guides explain decisions; they do not give personalized financial, tax, or legal advice.
People often frame this as a one-line contest: Is the mortgage interest rate higher or lower than the investment return I might earn? That is a useful input, but the decision has more moving parts. An avoided fixed mortgage cost is more predictable than a market return. Paying down principal can also leave money tied up in the house when another need arrives.
Imagine a household with $150,000 remaining on a mortgage and $180,000 in accessible savings. Using $150,000 to eliminate the loan might reduce monthly payments and interest. It would also leave $30,000 before any tax or other effects. If the household's core costs are $7,000 a month, that is a little over four months of cash. For one household that may be comfortable; for another approaching retirement with uncertain health expenses, it may be too tight.
Run two household scenarios
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