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Advisors suggest that it may be wise to pay off mortgages before retirement

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Navigating Financial Obligations in Retirement: What Advisors Say

Retirees Still Paying Off Mortgages and Credit Card Debt: Financial Advisors Weigh In

As retirement approaches, many individuals dream of a debt-free life, but for some retirees, paying off financial obligations well into their golden years is a reality. According to a recent Nationwide survey, just over one-quarter of self-described retirees with investable assets are still making mortgage payments, while a similar number are working to pay down existing credit card debt.

Financial advisors have varying perspectives on this issue, with some viewing mortgages as “good debt” due to being backed by an asset. Noah Damsky, CFA and founder of Marina Wealth Advisors in Los Angeles, believes that if the asset grows sufficiently to offset the cost of debt, it can be a wise investment.

On the other hand, advisors like Nicholas Bunio of Retirement Wealth Advisors caution against viewing all debt in the same light. Bunio emphasizes the importance of having enough assets to sustain retirement rather than solely focusing on becoming debt-free.

For retirees with high-interest, unsecured debt like credit card balances, advisors recommend prioritizing the elimination of these obligations to avoid financial strain in retirement. Andre Jean-Pierre of Aces Advisors in New York stresses the importance of managing debt carefully, especially in retirement when unexpected expenses can quickly escalate.

While some retirees may turn to reverse mortgages as a means of generating additional income in retirement, advisors like Andrew Herzog of The Watchman Group in Plano, Texas, advise caution. Herzog explains that reverse mortgages are not a “free money” solution and should be considered carefully, especially in terms of potential impact on heirs and future generations.

Ultimately, the decision to continue paying off debt in retirement or to pursue alternative financial strategies is a personal one that should be made with careful consideration and guidance from a trusted financial advisor.

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