Conventional wisdom says a mortgage should be paid off before retirement. If you can swing it, great! But real life is not always that simple. Nearly 40% of retirees still carry a mortgage, with an average balance of over $100,000. That is an extra $10,000 a year in payments, lasting over a decade.
Does that mean your retirement is in trouble if you still have a mortgage? Not at all. Instead, it is about thinking differently - using home equity as a tool rather than a burden. It is time to consider how a mortgage fits into your overall retirement plan, not just a bill to eliminate.
Mortgages are Not Just for the Young!
Cars, fashion, and dining habits differ for Millennials and Boomers. But a mortgage? It is the same product at 30 or 60. That is odd, considering the concerns at each age are worlds apart. Younger borrowers worry about paying off their mortgage early in case of an unexpected death.
Older borrowers are more focused on making payments into their 80s and beyond.
Freepik / Why treat a mortgage as a one-size-fits-all financial tool when your needs shift so dramatically over time?
The key is to rethink how you use home equity, especially when retirement income, lifestyle, and financial security are at stake.
What Does It Mean to Have a Mortgage in Retirement?
Meet Mary, a 70-year-old retiree with a $150,000 mortgage on a $1 million home. She is paying nearly $13,000 a year on her loan. With $100,000 in retirement income and $25,000 from Social Security, those mortgage payments take a big bite out of her budget.
Like most retirees, she wants to stay in her home but doesn’t want to sacrifice her lifestyle.
Mary has options: keep paying the mortgage and cut back spending, sell and downsize, use savings to pay it off, get a reverse mortgage, or refinance with a smarter approach. Each has trade-offs, but one solution stands out - HomeEquity2Income (H2I).
The H2I Approach Is a Smarter Way
Instead of sticking with the status quo, Mary chooses to refinance her mortgage under the HomeEquity2Income (H2I) plan. This strategy eliminates her monthly mortgage payments while boosting her cash flow and financial flexibility.
Austin / Unsplash / With H2I, you can replace your forward mortgage with a mix of home equity and structured income.
Her financial picture improves dramatically: she no longer pays $13,000 in yearly payments, receives an extra $15,000 in annual income for life, and has more liquidity to handle unexpected expenses.
The result? Over $28,000 in additional cash flow over the next 15 years and a more secure retirement plan.
More Cash, More Liquidity, More Security
Switching to an H2I mortgage plan gives Mary immediate benefits. Her extra cash flow lets her enjoy retirement - trips, gifts for grandkids, or simply peace of mind. Her liquidity jumps from $0 to over $300,000 by age 90, giving her flexibility if long-term care needs arise. And her legacy is not lost! At 95, her estate could be worth $1.3 million or more, depending on how she reinvests her extra funds.
Retirement is not about following outdated rules. It is about using every resource - including your mortgage - to create the best possible future. If you still have a mortgage in retirement, it is time to stop seeing it as a problem and start seeing it as an opportunity.
