Help Me Retire: I’m 64, make $1,500 a month driving Uber and get almost $5,000 a month in pensions and Social Security — should I pay off my mortgage before I retire?

Does it make sense to pay off my house at the time I retire?

See: I’m 67 and retired with $57,000 left on my mortgage and $600,000 saved for retirement — should I pay off my home now?

Dear reader, 

You ask one of the most common questions we get at MarketWatch about retirement saving and spending — if it makes sense to pay off a mortgage before retirement. 

The answer is, as you may have suspected: it depends. This situation is highly personal to the individual. Some people have absolutely no problems entering into retirement with a mortgage, while others are stressed at the idea of this debt over their heads when they’ve left the workforce. 

What you need to do before you can even answer this question is jot down every single expense you anticipate you’ll have in retirement, and add a little extra cushion for what you won’t expect. (You should aim to have an emergency savings fund that is easily accessible should an emergency arise … perhaps six months’ worth of expenses would do, though some retirees like to be extra cautious and have a whole year’s worth in a bank account.) When listing your expenses, include everything – the big bills, like your mortgage, taxes, utilities, groceries, gas for the car, medical needs, as well as the smaller, more flexible spending, such as vacations, gifts for loved ones, hobbies, entertainment, television and magazine subscriptions, pet care, and so on. 

See how your expenses compare to your income, but don’t include your Uber earnings (or any other earnings you may have). How do you feel about it? Is it too tight? More than enough? That can help you decide if you want that mortgage payment included in the list. 

Also see: I have a $250,000 mortgage, with 24 years left on the loan. Should I sell stock to pay off the mortgage before I retire in a few years?

Also determine if paying it off ahead of time will require you to continue working a bit longer, and if you’re interested in doing so. You probably don’t want to tap into your $850,000 to pay off the mortgage, as that would leave you with less than $700,000. You should have as much as possible in retirement savings before you retire. It may sound cliche, but advisers aren’t wrong when they say you can borrow for a home or an education but not your retirement. On the other hand, if you keep paying your mortgage for the next few years, and even throw a little extra at the principal when you can, you’ll end up with “bonus” money when you’ve already retired and you have all that extra cash. 

This only works if you can financially afford the mortgage in retirement, and you’re emotionally comfortable doing so. If the idea of having this bill going into retirement when you lose some of your income gives you any stress, and maybe even keeps you up at night, it won’t do you any good. In that instance, I would suggest trying to strike some sort of balance and reach out to a qualified financial planner to help you dig into the details of your financial plan and help you sort it out. 

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