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“The world feels unpredictable”: We’re 56 & 64 with a $17K Monthly Mortgage — Should We Pay It Off?

There’s a saying in personal finance: no one-size-fits-all. But when your mortgage payment hits $17,000 a month and retirement is right around the corner, that “no one-size-fits-all” feels more like a challenge — or even a puzzle you have to solve quickly.

The world really does feel unpredictable these days. Interest rates jump around, inflation keeps surprising us, and financial advice? Well, it’s all over the place. So when it comes to whether you should pay off a mortgage this big before retirement, it’s natural to feel stuck.

Peace of Mind vs. Growing Your Net Worth

Almost every financial advisor will start by asking: what matters more to you right now — peace of mind or growing your net worth? I’ve seen couples argue about this for months, while that hefty mortgage auto-draft quietly drains their checking account.

Some people sleep better without any debt hanging over their heads. Others can’t stand the idea of missing out on potential investment gains—especially after watching the stock market rally. Both views make sense, but that’s exactly where the debate starts.

The Emotional Weight of a Big Mortgage

Let’s be real: $17,000 a month isn’t just a number. It’s a heavy emotional burden. At 56 and 64, you’re probably thinking about fixed income, stability, and maybe even what you’ll leave your kids or grandkids. Anxiety about retirement can sneak in strong.

I’ve worked with clients who, after making their last mortgage payment, go from stressed to downright ecstatic — even if the math said it might not be the “best” financial move. That feeling of freedom? It’s priceless.

But here’s the catch: once you pour a big chunk of cash into your house, that money’s tied up. It’s not easy to access if something unexpected happens—a medical bill, a market downturn, or other surprises—especially when you’re not working anymore.

Crunching the Numbers: Liquidity vs. Returns

This is where things get tricky. If you have the cash to pay off the mortgage, should you? One way to look at it is by comparing your mortgage’s after-tax interest rate to what you expect from conservative investments.

Say your mortgage rate is 4.5%, but after tax deductions, it’s really closer to 3.5%. If you think you can get 5% or 6% from a balanced portfolio, it might make sense to keep the mortgage and invest the rest.

But life doesn’t always follow theory. Markets go up and down, bonds stumbled in 2022, stocks are riding a wave now, but who knows what next year brings? Your risk tolerance matters just as much—if not more—than any spreadsheet.

Retirement Income and Loans: A Real-World Hurdle

Here’s something not everyone thinks about: once you’re retired, qualifying for new loans gets harder. If you pay off your house now but later need cash, options like a HELOC or cash-out refinance might be off the table. Banks want proof of income, not just assets.

I’ve seen retirees with plenty of wealth get turned down simply because they don’t have a steady paycheck. Keeping your cash invested gives you flexibility—you can tap dividends, sell some shares, or keep money ready for big expenses.

Don’t Forget Taxes

The mortgage interest deduction can be a big deal for high earners, but since the 2017 tax changes, fewer people itemize deductions, and there are limits on what you can claim.

If you’re not itemizing or your mortgage is above the deduction cap, the tax break could be smaller than you think—making paying off the mortgage look a little more attractive.

Inflation’s Role: Why “Good Debt” Exists

In times of high inflation, having a fixed-rate mortgage can actually be a win. You’re paying with “tomorrow’s” dollars, which might be worth less, while your home’s value could be climbing. It’s one of the few ways we can use debt to our advantage.

But that only works if your income or investments keep pace with inflation. If they don’t, that mortgage payment starts to feel heavier with every passing year.

Cash Flow vs. Opportunity Cost

Let’s not sugarcoat it: $17,000 a month adds up to $204,000 a year. Even for households with comfortable net worths, that’s a lot of cash tied up. If you want to travel more, support grown kids, or cover medical bills, freeing that cash flow could be a game changer.

On the flip side, once your money is locked into the house, you lose flexibility. If the market booms, you miss out on gains. And if you suddenly need cash, selling in a soft market isn’t ideal.

When Paying Off the Mortgage Isn’t the Best Move

This isn’t a clear-cut choice for everyone.

If paying off your mortgage leaves you with little liquid cash, you could end up stressed over every surprise expense. I’ve seen retirees in that spot—and it’s not fun.

Also, if your mortgage rate is low, say under 3%, and you have a healthy cash cushion, you might be better off investing, donating, or helping family instead of rushing to pay off the loan.

Questions to Ask Yourself Before Deciding

• Will paying off the mortgage still leave you a solid emergency fund?
• Do you have other debts that cost more?
• How steady is your income after retirement?
• Are you planning to stay put for the long haul?
• Could you handle a big drop in your investment portfolio?

My Two Cents

Yes, the world is unpredictable. If paying off the mortgage helps you sleep better and you’re not draining your cash reserves, go for it. But don’t let fear be the main driver here. Being “house rich, cash poor” is a trap I’ve seen many fall into.

If your mortgage rate is low and you’ve got money stashed away, it’s totally okay to let the numbers guide you and keep that loan. Use the extra cash to build flexibility in retirement—it’s priceless.

Honestly, the right answer is the one that balances your financial security with peace of mind. Sometimes that means paying down part of the mortgage, keeping some cash ready, and adjusting as life changes. You can’t predict everything, but you can build a plan strong enough to weather surprises.

Financial decisions like this are never easy. The key? Stay flexible and remember: your money is about more than just numbers—it’s about how you want to live your life.

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