The theme this week on the Retirement Quick Tips Podcast is: Save More or Pay Off Debt Before Retirement?

Today, I’m talking about finding out how long it will take for you to pay off your mortgage - or any debt for that matter. The secret is using an amortization calculator.

Here’s how the amortization calculator works with your mortgage: Let’s say you have 15 years left on your mortgage and you’re 9 years from retirement. How much would you need to add to your monthly payment to pay off your mortgage the same month that you plan to retire?

When you use an amortization calculator which you can easily find online for free, you can enter extra payment amounts to figure out how much you would need to add to your mortgage every month to pay it off early by a certain date. 

When you actually run the numbers with an amortization, you might be surprised to learn that knocking those 6 years off your mortgage is totally doable, and not as burdensome as you might have expected.

For example, if you have 15 years left on your mortgage with a mortgage rate of 3.25% & a monthly payment of about $1740/mo, if you add another $1000 to your monthly payment, it shaves 6 years off, timing your mortgage payoff with when you retire. I ran this calculation in under a minute using my favorite amortization online calculator. 

Now you might balk at this because adding $1,000 to your monthly payment is a lot, but you’re most likely in your peak earning years so you’re making more money, and I’m also assuming that you’re saving less in your retirement accounts. 

Remember, you do need to run the numbers for yourself to make sure that it makes sense, but I can tell you for most people who are just a handful of years away from retirement, most of the time it pays to eliminate that mortgage payment, even if it means saving less in your 401k. 

I’ll link to my favorite amortization calculator in the show notes, so you can run the numbers for yourself. You can find the link and all the show notes for this episode - episode 1237 - in Apple Podcasts, Spotify, or most places where you’re listening to this podcast. 

Mortgage Amortization Calculator (from Bankrate) >>> https://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance