Many Retirees Still Carry Six-Figure Mortgages Well Into Their 80s

New Federal Reserve data reveals that many retirees in the U.S. are still carrying significant mortgage debt well into their later years. Contrary to conventional financial advice suggesting that retirees should aim to pay off their mortgages before retirement, more than a quarter of households aged 75 to 84 still owe substantial amounts on their homes. Even in the 85 to 94 age group, nearly one in five households still have mortgage or home-equity debt.

The median loan balances for these older borrowers remain high, with amounts exceeding $100,000 for those up to age 84 and $80,000 for those aged 85 to 94. This trend is partly due to borrowers who took on new mortgages later in life, refinanced existing loans, or used home-equity loans. The data suggests that these borrowers represent a subset of retirees who still owe significant amounts because they either bought homes later, moved, or took on new debt through refinancing or home-equity loans.

While carrying a mortgage into retirement isn’t necessarily a mistake, it does introduce financial risks. Fixed mortgage payments can strain tighter retirement budgets, especially if unexpected expenses arise. However, for some retirees, keeping a low-interest mortgage might be a sensible choice if paying it off would deplete savings needed for other essential expenses. The decision to hold onto mortgage debt should consider factors like income stability, interest rates, and the ability to cover unexpected costs without selling investments at unfavorable times.

Financial experts advise retirees to carefully assess how mortgage payments fit into their overall retirement income plan. Understanding the trade-offs between keeping a mortgage and paying it off can help retirees make informed decisions that align with their financial goals and security.