Mortgage-Free Retirement: Not Always the Smartest Move

The Federal Reserve's Survey of Consumer Finances reveals that homeownership peaks among older age groups, particularly those between the ages of 65 and 74. In this demographic, roughly eight in ten Americans own a home.

As people reach their late 60s, about 73% of retiree homeowners are mortgage-free, rising to over 90% by their mid-80s. This is because they've had decades to pay down their loans, with many buying homes when prices were lower and houses cost less in nominal terms.

While paying off a mortgage may seem like the right move before retiring, it's not always the best decision. The choice depends on individual circumstances, including income levels and debt. Some experts argue that keeping a low-interest mortgage may make sense if it's fixed and lower than what you could reasonably earn on a low-risk investment.

However, others suggest tackling higher-interest debt and building an emergency fund before focusing on paying off the mortgage. Home equity isn't readily accessible, so using too much cash to pay down the loan could leave retirees short in case of unexpected expenses.