Posted by Abundant Wealth Planning LLC

How to Retire Without a Mortgage

How to Retire Without a Mortgage

There are many expenses you will likely be faced with on retirement. One of the biggest is housing. Carrying mortgage debt to your retirement might be uncomfortable as you are on a fixed income. Based on records, an estimate of 30% of seniors enters retirement with mortgage debt. To them, this is a severe source of stress.

This is why it is an excellent option to explore ways to retire without the headache of having a mortgage to worry about. We discuss some helpful methods below:

  1. Fast Track Your Repayment Schedule 

This is simple and a no brainer. To retire without the stress of mortgage payment, pay it up simple. Let us assume you have a $250,000 mortgage at 5% interest at age 40. While with your plans, you will like to retire at age 67. For this arrangement to work, you will need three years off your current repayment schedule. You can, however, complete the payment three years earlier with a $50 extra payment each month. This will get you right where you need to be. 

If the option of paying extra money every month doesn't work for you, you can divert any bonus payment to the payment. Your tax refund, inheritance, gifts, etc. are an excellent source.

  1. Downsize

It might make sense to need a pretty big home when you have all your kids living with you. With your kids, however, in college or married, a bigger house might not work in your favor financially. Hence, to get rid of your mortgage before you retire, it makes sense to downsize. All it will take you is to use the revenue from the sale of your gigantic home to buy a small one. 

Even with kids that are still with you, and you need money to pay off a mortgage quickly, downsizing is an excellent opportunity. This is particularly true if there are all sorts of fixtures in your home like heater, AC, and you need to maintain this.

Even if you couldn’t buy a small house immediately after selling off the old one, your monthly savings will increase. With this, you get to reduce the year in which you can repay your loan. Also, there is the possibility of retiring without mortgage debts.

  1. Move In With the Kids

There are many advantages to moving in with your kids. Besides removing the headache of thinking about a mortgage, it is a perfect opportunity to watch your grandkids grow. Besides, you get to care for your grandchildren, removing the extra expenses of hiring a nanny. You also get enough care from your adult child.

This is an option many people consider. In addition, the rate at which many seniors move in with their adult child is rising. This is because, you, alongside your adult child benefits. This makes it a win-win situation. Financially, this makes sense for all the parties involved. The adult child gets to save on child care, while the retired parents can also help with house bills.

Also, moving in with your adult child allows forgetting the headache of the mortgage payment. This leaves you with equity that you can spend as it appeals to you.

  1. Get a Roommate

Taking a roommate comes with several advantages. If you have a spare bedroom, instead of allowing it to waste, let it out and divert it to your mortgage. This will reduce the overall time you have to complete the mortgage.

In addition to helping with a mortgage, you get other advantages with a roommate. You get to share the cost of many utilities like the internet and gas. You also share the cost of maintaining the house. There is also the benefit of helping with chores and companionship.

  1. Relocate to a Cheaper City

If your immediate neighborhood is proving hard in terms of the non-availability of a decent place to retire, why not consider somewhere else that is cheap. Yes, you will have to give up your friends and neighbors, but you also will save financially. With this in mind, consider places with affordable real estate.

If you want to move to a new locality, consider taxes as well, in addition to home prices. There are tax-friendly states in the U.S. to retire. In New Jersey, for instance, you will have to pay $2,530 for every $100,000 on your property.


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