In our work as retirement planning professionals, we make our clients’ dreams a central focus of our work. After all, how much money you accumulate for retirement doesn’t matter nearly as much as the why. So, we hear a lot of different ideal retirement scenarios, but most people have one thing in common: They want to retire free of debt.
Wouldn’t it feel fantastic, to know that all of your income is yours to spend as you see fit? In particular, you’d probably love to be free of your monthly mortgage payment. For most of us, our mortgage is our largest financial burden.
Home ownership – actual ownership, not “mortgageship” – is a central part of the American Dream. But with most of us signing up for 30-year mortgages, and buying several houses in our lifetimes, paying off that debt before retirement can seem impossible.
We have some good news for you: It is entirely possible to retire free of your mortgage, and it might be easier than you think. In many cases, you just have to make one small, simple change.
Are you making a monthly mortgage payment, for a term of 30 years? That’s 360 payments that you will make, before you actually own your home outright. But if you switch to a biweekly payment plan, you could shorten the life of your loan by several years.
How does it work? A biweekly plan doesn’t simply take your monthly payment and split it in half. Since there are 52 weeks in a year, you would be making 26 payments. And that works out to 13 payments per year, instead of your current twelve!
For most people, making this change is relatively easy. If you’re on a biweekly salary plan, you can align your mortgage payments with your paydays. You might not even notice the difference in your budget. But you will notice a difference when your home is paid off early!
Before making the switch, investigate whether your mortgage company charges a fee for this service. If necessary, shop around with competing lenders, so that this decision won’t cost you any extra. Also, call us to schedule an appointment, and we can discuss other creative retirement planning strategies that can help you retire free of debt.