Mortgage And Retirement

The Institute of Certified Financial Planners tells us how much money is needed for retirement and counts the ways you might lower your costs compared with your working years-reduced transportation and clothing costs, no payroll (Social Security) taxes, no money from the paycheck set aside for retirement and "you likely won't have a mortgage to pay."

That final point might give you pause: Will you actually have your mortgage paid off by retirement? Depending on where you are in life and how long you've been paying for your house, it may seem impossible that you'll ever own it free and clear. But then again, maybe you don't want to.

Financial planners generally estimate that you need 80 percent of your pre-retirement income in retirement; if you earn $60,000 a year now, you'll need $48,000 later.

If you actually have that much income, or even more, you may be glad you didn't rush to pay off the mortgage since it could well provide you with the biggest tax deduction available in retirement. On the other hand, if you don't have to make a mortgage payment, you'll have more money available to pay those taxes. Whatever your opinion on this issue, it's one aspect of retirement that you should plan for way, way ahead of time.