A number of Baby Boomers – people born between 1946 and 1964 - are retiring, but they haven’t finished paying off their mortgages. Some plan to continue paying into their 90s, defying the traditional approach of paying off all debts before the last day of work, so as to enjoy a burden-free retirement.
In the past decade or so, the number of senior citizens are still making mortgage payments have increased, Howard Dvorkin, founder of the Fort Lauderdale-based Consolidated Credit Counseling Services told the Sun Sentinel.
According to the paper, financial planners say a good number of mortgage-paying senior citizens are well-off and they want to keep their money in better investments.
Boca Raton financial planner Mari Adam told the Sentinel that a mortgage can work out for some retirees, including those with large government or corporate pensions who need a tax break to ease some of their federal taxes.
This situation is not unique to Baby Boomers in the U.S. A recent survey by RaboDirect, an online banking service, showed that a third of Australia’s Baby Boomers face retirement with a mortgage.
And to pay off the mortgage, 40 percent of Baby Boomers plan to sell their property and move into cheaper homes.
Boomers are slowly feeling the pinch and pressure of unstable economy and a majority expect the economy to continue getting worse. The RaboDirect National Savings and Debt survey shows that 62 percent boomers expect the economy to get worse in 12 months.
Also, according to the report, Baby Boomers expect to retire with $400,000 in superannuation – which is half the amount they think they need. They currently have $200,000 in funds. But even if Baby Boomers doubled their super balance between now and retirement, they say that it will only give them around 50% of what they need.
“For Boomers who are nervous that they will be facing tough times, there is a way to get the course of their savings plan back on track,” said Reene Amor, RaboDirect Australia spokesperson.
“It may sound basic, having a formal budget is one quick and easy way to start being in control of your finances. Another is to take a look at your investment and savings products and make sure you have the most suitable ones for your situation. A true savings account, for example, should have an ongoing and decent interest rate. Leaving your hard earned cash in low interest accounts is tantamount to throwing money away,” Amor said.
Similarly, in Canada too Baby Boomers are grappling with mortgage-issues post retirement. A survey conducted by brokerage firm T D Waterhouse showed that while three quarters of Baby Boomers felt it important to pay off their mortgages before retiring, less than half have done so. Only one quarter of baby boomers has paid off less than 25 percent of their mortgages.
