Mortgage lenders don’t like this idea and neither do landlords. There are some huge advantages in owning a home free and clear in retirement. In St. Paul the property taxes are high but property tax refunds are available through the State of Minnesota for low-income property owners.
In 2020 according to Zillow, 37% of Americans own their homes free and clear. The number went up by 5.5% after the Great Recession. In 2017 41% of baby boomers owned their homes free and clear. For seventy-year-olds, an estimated 68% are mortgage-free, in 2022 that number grew to 70%.
Over the years, I have read tons of advice suggesting paying off a mortgage isn’t a good idea. It makes sense that if paying off a mortgage means using up savings and retirement accounts it probably isn’t a good idea. Other debts should be paid off first, especially credit card debt.
Owning a home free and clear means lower housing costs during retirement. Those property taxes are killer but still lower than renting or paying taxes and making mortgage payments.
It might even be possible to retire without having a million dollars by owning a modest home that is paid for and no debt.
It isn’t possible to save up enough for long-term care. To get help paying for care seniors will need to spend all of their savings. In most cases, homeowners do not have to sell their houses to pay for care as long as they live in the house.
There are some psychological benefits of not having to make house payments can be liberating. Something to consider when planning for retirement.
