Should You Pay Off Your Mortgage or Invest for Retirement?

The loan you take out to purchase a home is often the largest debt you will carry in your lifetime. Paying off your mortgage is an attractive concept, because it provides a sense of financial security and significantly reduces your debt load. With no payments to a mortgage lender every month, you have the freedom to invest or use the extra money to pay down other outstanding balances.

On the other hand, the additional money you’re using to accelerate paying off your home loan could be put toward investing in your retirement account instead. In order to make good financial decisions with regard to both of these important goals, you’ll need to take a number of things into consideration before prioritizing one over the other.

There isn’t an easy answer to the question of whether it’s better to pay off your mortgage or invest for retirement because it depends on your unique situation. The following is an example of how your particular situation might influence the direction you take.


We’re happy to answer any questions you have about our firm and our processes. Here are answers to some of the questions we receive most frequently.

single light bulb

Things to take into consideration

When contemplating paying off your mortgage, one of the factors to consider is your age and how early into a 30-year note you are. In the first 10 years of a 30-year home loan, the biggest part of your monthly payment is going toward interest, but the proportions eventually reverse as you get closer to the end of the term. You can save a lot of money on interest and lessen the length of your loan by paying extra in the beginning, however those savings drop considerably as you near the pay-off date.

There is also a big benefit associated with starting early investing in your retirement account. With plenty of time until retirement, the money sitting in your retirement account is subject to compound interest, which accelerates growth. For that reason, prioritizing retirement over mortgage payments when you’re younger generally makes the most sense.


The Essential Guide to Retirement Planning

A 4-part series that answers key questions about building your plan, positioning your investments, and more.

Retirement Planning Guides - 4-part collection
FREE Download

More factors at play

Having said that, there are a number of other factors related to your own unique financial situation to be taken into consideration before plotting a course of action. Your personal, family and career goals will all have an influence on your financial plan. And because these things change as you go through the various stages of life, talking to a financial advisor on a regular basis will help you make sure your plan reflects your fluctuating goals and desires over time.

If you’d like to talk more in depth about the pros and cons of paying off your mortgage and investing in retirement “Schedule and Introduction”. A related point is that as a homeowner in the era of climate change, you may be thinking about ways to save on energy costs and reduce your carbon footprint. Should you go solar? Click on the link to learn more.

Disclosure: The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice, and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites.

Comments are closed.