Money

Suze Orman: This is the single most important thing to do before you retire

According to personal finance expert Suze Orman, "70 is the new retirement age."

But whether you settle down at 70 or before, there's one thing you should make sure to do first, she writes on Money: Pay off your mortgage.

"More than one in three homeowners 65 or older is still paying off a mortgage," Orman says. "This is so not okay." If you plan on remaining in your home through your golden years, "you should make it your top priority right now to get the mortgage paid off before you retire."

Suze Orman speaking at the eMerge Americas conference in Miami on June 12, 2017.
David A. Grogan | CNBC
Suze Orman speaking at the eMerge Americas conference in Miami on June 12, 2017.

Besides eliminating a financial burden, becoming mortgage-free will reduce stress and give you peace of mind, she writes: "You will be more protected from any number of unknowns: being forced to leave your job sooner than you expected; or the possibility that tax rates will rise, effectively reducing the value of what you have saved in your traditional retirement accounts; or the risk that investment returns will disappoint."

Plus, "you will be extra glad to be mortgage-free when the markets fall," she continues. "Those are the times when being able to rein in your spending a bit can be such a big help."

Orman even advises cutting back the amount you're directing to your retirement accounts in order to have more cash to pay down your mortgage.

That said, you should still contribute enough to get the full 401(k) match if your company offers one, she says: "That is to never be turned down. But, beyond that, I say stop saving at work and plow the extra money that will pop into your paycheck to reducing your mortgage debt ASAP."

While there are a handful of pros to paying off your mortgage before retirement, there are also a few cons to consider. "One of the top cons to paying off a mortgage early," Deborah Nason reports for CNBC, "is not using the inflation-hedging ability offered by a fixed rate mortgage, where the bank assumes all of the risk."

As certified financial planner Patrick Stark tells Nason, "For those with sufficient assets to weather stock market volatility, using a mortgage to free up assets provides leverage to capture the higher returns that the equity markets have historically provided over the long run."

But according to Orman, it's an easy call: "I am adamant that paying off the mortgage before retirement takes financial — and emotional — pressure off you."

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