--- title: "Retiring With a Mortgage: Why More Americans Are Carrying Housing Debt Into Retirement" description: More Americans are retiring with mortgages. Learn how housing debt can affect retirement income, liquidity, taxes, and financial flexibility. image: https://blog.designfinancialgroup.com/hubfs/Retire%20with%20a%20morgage%20Blog.png --- [Skip to content](https://blog.designfinancialgroup.com/blog/retiring-with-a-mortgage-why-more-americans-are-carrying-housing-debt-into-retirement#main-content) ![](https://blog.designfinancialgroup.com/hs-fs/hubfs/Retire%20with%20a%20morgage%20Blog.png?width=1774&height=887&name=Retire%20with%20a%20morgage%20Blog.png) # Retiring With a Mortgage: Why More Americans Are Carrying Housing Debt Into Retirement ![Richard Shupick](https://blog.designfinancialgroup.com/hs-fs/hubfs/Rich_Shupick_0073.jpg?width=48&height=48&name=Rich_Shupick_0073.jpg) Richard Shupick September 2, 2026 For decades, the traditional retirement picture was easy to recognize: finish working, collect Social Security, and enjoy a home with no mortgage payment. For many Americans, however, that picture no longer reflects reality. Retirement may now arrive while monthly mortgage statements continue for another five, ten, or even twenty years. Consider a hypothetical couple preparing to retire at age 66. They refinanced several years ago at an attractive interest rate, still owe $140,000, and have enough savings and investments to eliminate the balance. Paying it off would feel reassuring, but doing so would require a substantial withdrawal from their retirement accounts. Their real question is whether keeping the mortgage or paying it off would leave them better prepared for the retirement they want. ## **Mortgage Debt Is Following Americans Into Later Life** Carrying a mortgage into retirement has become increasingly common. An Urban Institute analysis of Federal Reserve data found that 38 percent of homeowners ages 65 to 74 had a mortgage in 2022, compared with 29 percent in 1998. Among homeowners age 75 and older, the share nearly tripled during that period, rising from 10.9 percent to 30.1 percent. Mortgage balances have increased as well. Homeowners age 75 and older who still had a mortgage owed a median of $106,800 in 2022, according to the same analysis. That was 61 percent more than in 1998 after adjusting for inflation. There are several reasons for this change. Americans are buying homes later, refinancing existing loans, moving after retirement, and using home equity for renovations or other expenses. Divorce, remarriage, job changes, and financial assistance for adult children can also interrupt the traditional path toward owning a home outright. ## **Why a Mortgage Feels Different After Retirement** A payment that was manageable during a working career can feel much larger once regular paychecks stop. Social Security, pensions, and retirement account withdrawals must now cover housing alongside food, utilities, health care, travel, and other priorities. Even when retirement income is sufficient, a large fixed payment leaves less room to adjust when expenses change. Housing costs also extend well beyond the mortgage. Property taxes, homeowners insurance, repairs, utilities, association fees, and routine maintenance continue after the loan is paid. The Federal Reserve reported that the median monthly mortgage payment among homeowners with a mortgage was $1,600 in 2025. It also found that more than six in ten insured homeowners said their insurance costs had increased by more than expected in recent years. This makes it important to test the entire housing budget, not merely principal and interest. A home that appears affordable today may become more difficult to maintain if taxes rise, insurance premiums increase, or a roof or furnace needs replacement. ## **A Mortgage in Retirement Is Not Automatically a Mistake** The idea of entering retirement debt free has undeniable appeal. Eliminating a mortgage can reduce monthly expenses, lower the amount that must be withdrawn from savings and investments, and provide emotional comfort during uncertain markets. For someone whose income barely covers expenses, removing a large payment may meaningfully improve financial stability. Still, paying off the mortgage is not automatically the right decision. A homeowner with a low fixed interest rate may prefer to preserve cash for emergencies, health care, or future opportunities. Using most available savings and investments to eliminate the loan could create a different problem: owning a valuable home while having too little accessible money. The source of the payoff funds also matters. Distributions from traditional IRAs are generally included in taxable income. A large withdrawal could increase the taxable portion of Social Security benefits and potentially affect certain Medicare premiums in a future year. Because the results depend on individual circumstances, homeowners should speak with qualified financial and tax professionals before using retirement assets for a large payoff. ## **The Investment Comparison Is Not So Simple** Homeowners sometimes compare their mortgage rate with the return they expect from investments. Hypothetically, if the mortgage costs 3 percent and a portfolio might earn more over time, keeping the mortgage can appear mathematically attractive. However, mortgage interest is a known expense, while investment returns are uncertain and may arrive unevenly. Sequence risk adds another concern. This is the danger that poor market returns early in retirement, combined with ongoing withdrawals, may cause lasting damage to a portfolio. A retiree who needs larger withdrawals to cover a mortgage during a market decline may be forced to sell investments at an unfavorable time. Taxes and liquidity further complicate the comparison. Mortgage interest generally benefits only taxpayers who itemize deductions, and other limitations may apply. Meanwhile, money used to pay down the loan becomes home equity and may be more difficult or expensive to access later. The decision should therefore consider the mortgage rate, available reserves, tax consequences, and the retiree’s ability to withstand changing markets. ## **Questions That Can Clarify the Decision** Begin by asking whether retirement income can comfortably support the payment under normal and difficult conditions. The analysis should account for a market decline, an unexpected repair, increased health care expenses, and the possibility that one spouse may eventually live on a reduced household income. If the mortgage only works when everything goes according to the original strategy, the margin for error may be too small. Next, consider how much accessible money would remain after paying off the loan. Retirees generally need adequate reserves because unexpected expenses do not wait for favorable markets. Becoming mortgage free should not require becoming cash poor. The terms and remaining life of the loan also deserve attention. A small balance scheduled to disappear within a few years presents a different decision from a large mortgage that may continue into the borrower’s eighties. The interest rate, monthly payment, payoff date, and whether the rate can change should all be reviewed. Finally, consider whether the home still fits the future. Paying off a property that may soon be too large, expensive, or difficult to maintain could commit additional money to a home that no longer supports the next stage of life. ## **Housing Is Both an Asset and a Home** A home is often one of a retiree’s largest assets, but it is also tied to family, community, and routine. Some people may willingly accept higher housing costs to remain near family, familiar doctors, friends, and activities that contribute to their quality of life. Those personal benefits deserve a place in the decision. Others may find that downsizing creates breathing room in the retirement budget. Selling a larger home could eliminate the mortgage, reduce maintenance, and release equity for other needs. Yet downsizing is not guaranteed to produce major savings once transaction expenses, moving costs, renovations, and the price of a replacement home are considered. Housing decisions should therefore be evaluated as part of the full retirement strategy. A financial professional can help illustrate how the alternatives may affect income and investments. A tax professional can evaluate potential tax consequences, while a qualified mortgage professional can explain loan terms and borrowing options. ## **Conclusion: The Goal Is a Sustainable Retirement, Not Simply a Paid Off House** Retiring with a mortgage is no longer unusual, and it does not automatically mean someone prepared poorly. Keeping a manageable, low rate mortgage may preserve valuable liquidity for one household, while eliminating the payment may provide greater stability for another. The right decision for you requires more than comparing a mortgage rate with an expected investment return. It should reflect income, available reserves, taxes, housing costs, and the possibility that life may not follow the original script. A paid off house can be a valuable milestone, but the larger goal is a retirement that remains sustainable through changing circumstances. ## **Sources** Board of Governors of the Federal Reserve System, “Report on the Economic Well Being of U.S. Households in 2025: Housing” [https://www.federalreserve.gov/publications/2026-economic-well-being-of-us-households-in-2025-housing.htm](https://www.federalreserve.gov/publications/2026-economic-well-being-of-us-households-in-2025-housing.htm?utm_source=chatgpt.com) Urban Institute, “Expanding Access to Home Equity Could Improve the Financial Security of Older Homeowners” [https://www.urban.org/urban-wire/expanding-access-home-equity-could-improve-financial-security-older-homeowners](https://www.urban.org/urban-wire/expanding-access-home-equity-could-improve-financial-security-older-homeowners)  Internal Revenue Service, “Retirement Plans FAQs Regarding IRA Distributions” [https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals](https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals?utm_source=chatgpt.com) Internal Revenue Service, “Social Security Income” [https://www.irs.gov/faqs/social-security-income](https://www.irs.gov/faqs/social-security-income?utm_source=chatgpt.com) Internal Revenue Service, “Publication 936, Home Mortgage Interest Deduction” [https://www.irs.gov/publications/p936](https://www.irs.gov/publications/p936?utm_source=chatgpt.com) Medicare, “How Income Affects Your Medicare Drug Coverage Premiums” [https://www.medicare.gov/publications/11469-how-income-affects-your-medicare-prescription-drug-coverage-premiums.pdf](https://www.medicare.gov/publications/11469-how-income-affects-your-medicare-prescription-drug-coverage-premiums.pdf?utm_source=chatgpt.com) ## Share this post [mailto:https%3A%2F%2Fblog.designfinancialgroup.com%2Fblog%2Fretiring-with-a-mortgage-why-more-americans-are-carrying-housing-debt-into-retirement](mailto:https%3A%2F%2Fblog.designfinancialgroup.com%2Fblog%2Fretiring-with-a-mortgage-why-more-americans-are-carrying-housing-debt-into-retirement) ## Keep reading ### [![](https://blog.designfinancialgroup.com/hs-fs/hubfs/No%20Hire%20No%20Fire%20Blog.png?width=1774&height=887&name=No%20Hire%20No%20Fire%20Blog.png) The “No Hire, No Fire” Economy: What a Slower Job Market Means for Retirement Savers](https://blog.designfinancialgroup.com/blog/the-no-hire-no-fire-economy-what-a-slower-job-market-means-for-retirement-savers) ### [![](https://blog.designfinancialgroup.com/hs-fs/hubfs/AI%20Scam%20Call%20Blog.png?width=1774&height=887&name=AI%20Scam%20Call%20Blog.png) The New Sound of Fraud: Protecting Your Retirement Savings From AI Imposters](https://blog.designfinancialgroup.com/blog/when-the-caller-sounds-like-family-protecting-retirement-savings-from-ai-imposter-scams) [![Design-FullLogo-HighRes tight 2500 White (2)-1](https://blog.designfinancialgroup.com/hs-fs/hubfs/Design-FullLogo-HighRes%20tight%202500%20White%20(2)-1.png?width=6532&height=1100&name=Design-FullLogo-HighRes%20tight%202500%20White%20(2)-1.png "Design-FullLogo-HighRes tight 2500 White (2)-1")](https://www.designfinancialgroup.com/) - Home - Products - Pricing - Blog - Company --- *Securities offered through OneAmerica Securities, Inc., a Registered Investment Advisor, Member [FINRA](https://www.finra.org/), [SIPC](https://www.sipc.org/). 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