Paying off the Mortgage

Physician's Money Digest, February28 2005, Volume 12, Issue 4

Tip:

One of the arguments for not payingoff a home mortgage as you approachretirement is the tax write-off. Sincemortgage interest is deductible, UncleSam is, in effect, helping you out on yourmortgage payments. But the help maycome at a steep price. For starters, takingextra money out of your retirement fundsto cover the mortgage payments can kickyou into a higher tax bracket and make aportion of your Social Security benefitstaxable. You also have to pay taxes onany withdrawals, which means that biggerIRA payouts lead to higher tax bills.Structure your mortgage with youranticipated retirement date in mind. Ifyour current mortgage doesn't end untilafter you retire, think about acceleratedpayments so you'll own the home freeand clear when you quit working.