Paying off the mortgage isn't the priority it once was, and for many households, it isn't even a possibility. But a new report from
The report, called ''Housing America's Older Adults,'' focuses on the changes needed to supply sufficient affordable housing for the country's 50-and-over population, which is projected to increase about 20 percent by 2030. The report found that paying off a mortgage dramatically reduces housing costs and provides an equity cushion to help cover other major expenses.
About a third of mortgaged households between the ages of 50 and 64 are moderately to severely burdened by housing costs, which include property taxes, insurance and utilities, the report said. (Moderately burdened is defined as spending 30 to 50 percent of income on housing costs; severely burdened households dedicate more than half their income to housing.)
But among similarly aged homeowners without mortgages, only 12 percent are cost-burdened.
Because income declines with age, the housing burden rises dramatically for households aged 80 and over. Nearly two-thirds of these households still paying mortgages are cost-burdened, compared with less than a quarter of homeowners over 80 without mortgages.
Lower-income renters are in the worst financial position. Some 77 percent of renters over 50 with annual incomes below
''Those groups are going to struggle through much of their retirement years,''
Among baby boomers with mortgage debt, more are carrying it into retirement. As of 2010, 40 percent of households 65 and up were still paying a mortgage, compared with about 18 percent in 1992, according to the report.
The report's findings ''opened my eyes to think that you really do need to have a financial strategy toward paying off your mortgage,''
Homeowners nearing retirement who have a mortgage with a low fixed-interest rate shouldn't necessarily pay it off, so long as they have accumulated enough assets in retirement accounts to comfortably cover the monthly expense, said
Still, with fewer employers offering pensions, whenever a homeowner ''can financially afford to redirect their efforts to pay down the mortgage,''
CHARTS: INDEX FOR ADJUSTABLE RATE MORTGAGES: 1-year Treasury rate (Source: HSH.com)
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