More and more baby boomers are reaching retirement age and an increasing trend is that many do not have enough funds saved for retirement. According to a recent report by CNBC, part of the problem for retirees may be their eagerness to pay off debts to mortgage companies.
On the surface, making an effort to pay off one’s mortgage early seems like a great way to get rid of excessive debt. After all, only having to make 25 year’s worth of payments on a 30-year mortgage does save money. The problem, analysts report, is that some individuals focus so much on paying extra on their loan that they fail to make adequate investments for retirement, which hurts them in the long run.
So what should be done? Experts recommend that individuals make regular monthly payments to mortgage companies, rather than trying to pay extra. Individuals can use that extra money to pay off credit card debt, make contributions to retirement funds such as a 401(k) or IRA, and build an emergency savings fund.
Even if one’s mortgage payments extend into retirement, this strategy helps ensure that retiring boomers have plenty of money set aside to both pay off what’s left of their mortgage and support their lifestyle through the retirement years.
(Image via For Sale by Owner)