Should You Have a Mortgage in Retirement? The Unforeseen Adventure of Your Golden Years

Gone are the days when retiring mortgage-free was the norm. Now, it's as rare as a polite political debate. Why the shift? For starters, some folks are making a strategic play, using their home equity as part of a broader financial strategy.

Others are upgrading their digs later in life because who doesn't want a home theater or a personal spa in their 60s? And then there are those for whom life threw a curveball, and now they're up to bat with a mortgage as their pitcher.

Let's talk about that curveball.

Let's pretend it's the year 2003, and you're someone who is 40. What happens in a few years? The Great Recession, that's what happens. Millions lost their jobs, became redundant, couldn't find work, were 'overqualified,' or had to change careers altogether.

Many families filed for bankruptcy, their homes foreclosed on, and credit ratings demolished.

Fast forward from 2003 to 2024, you're not 40 anymore, you're 61. Not quite ready for retirement, but you're thinking about it. If you were one of the unfortunate people who got hit during The Great Recession, you might still be behind - and that's what's going on with millions of retirees.

Navigating mortgage payments on a fixed income is an art form, a delicate balance between scrimping and splurging, all while trying not to tip over. It's about becoming a black belt in financial jiu-jitsu, where refinancing or a reverse mortgage can be as crucial to your survival as water is to a fish.

This isn't your run-of-the-mill budgeting; it's crafting a financial strategy with the precision of a chess grandmaster, where every move is deliberate, and every penny is a pawn.

As Ryan Carrigan of moveBuddha said:

If you are reaching retirement age and still have a mortgage, you can look into getting a reverse mortgage. Reverse mortgages are a type of home loan that pays out whatever equity you have in your home, with the caveat that when you get ready to sell, or move, the lender gets paid back from those proceeds.

CEO & Founder of moveBuddha

Ryan Carrigan

Every cloud has a silver lining, and a mortgage in retirement is no exception. Believe it or not, there are benefits to this seemingly mad scenario.

For one, the tax deductions can be quite lovely, like finding an unexpected chocolate on your pillow. And let's not overlook the mental gymnastics it requires to manage a mortgage, keeping your mind as sharp as a tack. Because who needs Sudoku when you have mortgage statements to decipher?

Interest rates could be another silver lining in your golden years. Some retirees pay very little interest on their mortgages. Weigh this against the returns on your investments and holding onto your mortgage could start to look like an attractive option.

Brillant Law's David Brillant commented:

If a retiree's mortgage interest rate is significantly lower than their investment yield, it makes financial sense to prioritize investments over an early mortgage payoff. This strategy can potentially enhance their estate's value over time. For instance, if a retiree has a mortgage interest rate of 3% but their investment portfolio averages a 6% return annually, it's financially beneficial to leverage the difference.

Certified Estate Law Specialist, Brillant Law Firm

David Brillant

For every horror story of retirement dreams drowned by mortgage payments, there's a tale of triumph that restores our faith in financial planning. There are those who have navigated the treacherous waters of retirement mortgages with the skill of a seasoned sailor, emerging on the other side with their homes and sanity intact.

These stories remind us, amidst the chaos, that anything is possible with a bit of planning and a lot of humor. And beer. Or whisky. Or weed. Hell, maybe all of it. In moderation, of course.

As we gaze into the crystal ball, it's clear that retiring with a mortgage might just become the new normal, a badge of honor for the modern retiree. The future could bring innovative financial products, making mortgages more manageable for retirees or a shift in how we view homeownership and retirement altogether.

In the end, retiring with a mortgage is about embracing the adventure and navigating the highs and lows with a sense of humor and a dose of realism. It's a reminder that retirement, much like life, is what you make of it. So, here's to the unforeseen adventures of your golden years. May they be filled with laughter, strategic financial planning, and, if lucky, the occasional mortgage-burning party. After all, who said retirement couldn't be thrilling?