Although paying off your mortgage before retirement is generally thought of as a good idea, there are some considerations that should be taken into account. The biggest consideration regarding your mortgage and your overall retirement is price inflation. When the Federal Reserve artificially sets interest rates too low, this creates money out of thin air, which will eventually translate into higher prices.
If you have a fixed rate mortgage on your home and price inflation is low, then paying off your loan is a good idea. But if price inflation is running at 8% per year and you have an interest rate on your mortgage of 6%, then you will actually lose money paying off your mortgage.
Let’s say you have a pension or you receive Social Security that equals $1,000 per month. Let’s also say that you have a fixed rate mortgage and your payment is $1,000 per month. If price inflation starts to increase rapidly, your $1,000 per month from your pension will be worth less and less. But if you use it to pay off your mortgage, then you are not losing anything on it.
Paying off your house can give you a powerful feeling and an emotional high. If this is important to you, then you need to be wise with your investing. The biggest threat to retirees is inflation. Make sure you protect your financial investments from inflation. This means you should have assets like gold and silver. These can now be bought like stocks (symbols are GLD and SLV). This will protect your retirement funds from devaluation.
In conclusion, pay off your mortgage if it will make you feel more powerful emotionally, but make sure you protect your retirement investments from inflation.