Many retirees are mortgage-free, but whether that’s the right move depends on your finances.
Credit: Getty Images / MoMo Productions Key Takeaways
Homeownership peaks around retirement age, with roughly 8 in 10 Americans owning a home in their mid-60s to mid-70s.
About 73% of retiree homeowners are mortgage-free by their late 60s, rising to over 90% by their mid-80s.
Paying off a mortgage isn’t always the smartest retirement move—it depends on your broader finances.
Many Americans hope to own their home by the time they retire. Retirement often means having less money to live off, so it’s understandable to want rent or mortgage payments out of the equation by then.
But not everyone follows that path—and that’s not always a bad thing.
Why This Matters
Most retirement-age homeowners own their home outright. That can lower living costs, although prioritizing mortgage payoff isn’t automatically the right money move for everyone.
Homeownership Peaks Around Retirement Age
According to the Federal Reserve’s latest Survey of Consumer Finances (SCF), homeownership becomes more common across older age groups, peaking among adults ages 65 to 74.
Only 45% of adults ages 25 to 34 own a home. That share rises to 64% among 35- to 44-year-olds and continues climbing through the retirement years, peaking at 81% among adults ages 65 to 74 before declining at older ages.
This isn’t surprising, since buying a home typically requires substantial savings for a down payment and upfront costs, as well as the income and credit profile needed to qualify for a mortgage. Both can take time to establish. First-time buyers, for example, put down 10% of the purchase price on average. Applied to the U.S. median home price of $408,776, that would mean a down payment of over $40,000.
That’s a lot of money to accumulate, especially for younger adults who may also be paying rent or student loans while covering other major expenses. Lower earnings earlier in a career can make it even harder to save enough for a home, and buying may not always be an immediate priority.
While homeownership builds up during midlife, it begins to decline among the oldest age groups. One common reason is that some older adults sell their homes after losing a spouse or moving to assisted living or long-term care.
Most Older Homeowners Have No Mortgage
The older people are, the more likely they are to fully own their home. About 73% of homeowners ages 65 to 69 have no mortgage or home equity loan left to pay off. That share rises with age, reaching 83% among homeowners ages 75 to 79 and 92% among those 85 or older.
The reason for this is fairly simple: the longer someone has owned a home, the more time they’ve had to pay down the loan. Mortgages are commonly structured over 30 years, so homeowners who stay in place for decades may reach retirement with little or no balance left.
But not everyone follows this path. Many people sell one home and buy another over the years, or refinance along the way, which can reset the mortgage clock. Even so, by their late 60s and beyond, many homeowners have had decades to pay down what they owe.
Home prices may also have helped older generations become mortgage-free. Many homeowners in the oldest age groups bought decades ago, when houses cost much less in nominal terms, giving them more time to build equity and pay down their loans.
Is It Better to Be Mortgage-Free in Retirement?
Not necessarily. Paying off a mortgage is often presented as a must-do before retiring, but whether it’s worth prioritizing depends heavily on your individual circumstances.
The Case for Paying It Off
When you retire, you may have less income and fewer opportunities to increase it. That can make eliminating a large monthly expense like a mortgage especially appealing.
Paying it off also gives you a return roughly equal to the interest rate you’re no longer paying, which can be especially attractive if that rate is higher than what you could reasonably earn on a low-risk investment.
The Case for Keeping a Mortgage
If your mortgage rate is fixed and lower than what you could reasonably earn on a low-risk investment, keeping the loan may make sense. Instead of using a large sum to pay it off, you could keep that money invested or available for other needs.
Your broader finances matter, too. Before paying off a mortgage, it may make more sense to tackle higher-interest debt and make sure you have sufficient retirement savings and an emergency fund. Home equity isn’t readily accessible, so using too much of your cash to pay down the mortgage could leave you short if an unexpected expense comes up.
How Reverse Mortgages Work
A reverse mortgage lets eligible homeowners age 62 or older tap home equity without selling the home or making monthly mortgage payments. The balance generally becomes due when the borrower sells the home, moves out permanently, or dies.
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