| When you’ve reached retirement age and are | | | | the retirement years. |
| ready to kick back and take life easy, it's not a good | | | | Take the very public example of Ed McMahon. Mr. |
| move to put yourself in the stressful position of | | | | McMahon was reputed to be worth over $200 million |
| having to pay a mortgage. Whether it's for a new | | | | in real estate. He was still actively working into his |
| house or second vacation home, if you have the | | | | retirement years and therefore was confident he |
| savings, many financial advisors say pay cash. | | | | could easily meet the mortgage payments on the |
| Mortgages increase risk at a time when it should be | | | | $4.8 million in loans he was carrying. |
| avoided. As you move retirement accounts from | | | | Then he fell down. Literally. |
| high-risk stocks to low-risk money market funds as | | | | After an unfortunate accident, in which he broke his |
| you get closer to retirement day, it's just as prudent | | | | neck, he found himself unable to work. A series of |
| to avoid the financial risk of a mortgage at this time. | | | | operations to repair the damage set him back further. |
| That said, there are some cases in which it might be | | | | Couple this with the national real estate market on its |
| advantageous to the retiree to assume a mortgage. | | | | current downward spiral, and you have a recipe for |
| The tax benefits come to mind first. Taking | | | | disaster that any retiree can ill afford. |
| advantage of this may require some fancy | | | | Mr. McDonald says the majority of baby boomers |
| paperwork with your retirement accounts, though. | | | | – 55 percent – believe they can keep |
| One advisor has recommended purchasing a | | | | working, and carrying a mortgage, well into their 70s. |
| higher-priced home and using the income from your | | | | He advises those approaching retirement age to |
| IRA to pay down the mortgage. The individual | | | | make every effort to pay down the mortgage – |
| approaching retirement age, either sells his or her | | | | doubling up on payments if they have to. He |
| current home or purchases a second home – one | | | | recommends refinancing at age 55 with a 10 year |
| that is more valuable than the current home. The | | | | adjustable rate mortgage and make large monthly |
| individual then increases the cash flow from his or her | | | | payments – double payments if necessary – |
| IRA or other retirement account to pay the | | | | to pay it off by age 65. He suggests that it may be |
| mortgage. | | | | necessary to downsize your residence in order to |
| This strategy works easily for those whose | | | | have a mortgage that is manageable. |
| retirement savings have accumulated a value of $2 | | | | The bottom line here is, if you're not fabulously rich |
| million or more, though. And, as this is not most of | | | | – and most of us aren't – it doesn't make |
| us, we should probably consider the advice of the | | | | financial sense to carry a mortgage into your |
| Finance Guy, John Henry McDonald, at News 8 Austin | | | | retirement years. |
| who echoes those advisors warning of mortgages in | | | | |