Save More or Pay Off Your Mortgage?
As you get closer to retirement, should you save more or pay off your mortgage? This was a question we received from a listener. Let’s look at the key factors of your decision.
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Today we have a question from Laura. She writes, “My husband and I will be 52 years old this year. Should we focus on saving more for retirement or paying off our mortgage?”
Why Pay Off Your Mortgage Before You Retire?
Your mortgage payments are typically one of your biggest expenses. Not having that expense frees up money for other things or reduces the stress on your savings. We like to see people not have a mortgage when they go into retirement.
An Example:
Laura and her husband need $2,000 per month from savings to cover their expenses—including their mortgage. Using the 4% rule as a basic guideline, they would need about $600,000 in savings.

Their mortgage payment is $800 per month. If they pay off the note before retirement, they would only need about $1,200 per month from savings. Using the 4% rule, this means they only need about $360,000 in savings. It is a significant difference.

What Factors In Your Decision?
If you are trying to determine whether you should pay more on your mortgage or save more, ask these questions:
If you keep your mortgage payment the same, will your mortgage be paid off by the time you retire?
Will paying more on your loan eliminate your mortgage by the time you retire?
If the answer is yes, consider paying extra on your note.
How much have you already saved and how much are you saving towards retirement?
If you have been a good saver and have a good foundation, it’s easier to favor paying extra on your loan. But if you have not been a good saver, you may want to place a higher priority on your savings.
Talk to a Certified Financial Planner™ Professional
There are a lot of moving parts to this and it is a great thing to discuss with a financial planner. They can help you build a strategy that makes sense for you and helps you achieve the best possible outcome.

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About the Author
Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors. He specializes in helping hard working, middle class families plan for retirement.