Baby boomers in their 50s and 60s are carrying much more mortgage debt than their parents did at their age. While some boomers may be willing to seek financing again to purchase another home, others are eager to get rid of their mortgage debt altogether.
A recent study by the Employee Benefit Research Institute found "the percentages of families whose debt payments are excessive relative to their incomes are at or near their highest levels since 1992." The report found that as a result, "even more near-elderly and elderly families are likely to find themselves at risk for severe changes in lifestyle after retirement than past generations."
Housing debt is a major concern. The median outstanding mortgage balance for a 50-to-69-year-old household grew 142 percent in 20 years, from nearly $49,000 in 1992 to $118,000 in 2013, according to data from the not-for-profit Demand Institute. Still some financial experts say racing to retire "mortgage-free" isn't always the best strategy, even as boomers try to lessen their financial burden before they retire.
"A lot of baby boomers aren't on track for retirement, and rushing to pay off a mortgage could be problematic for a lot of them," said Thomas J. Anderson, author of "The Value of Debt in Retirement." Instead, "having a portfolio of cash and conservative, globally diversified investments gives you liquidity and flexibility," he said.
Before refinancing into a shorter-term loan or making extra payments to pay off their mortgage, Boomers should make sure they've taken these three steps: