Paying off your mortgage before retirement might seem like an obvious choice. After all, owning your home outright means fewer monthly expenses, right? But before you start making extra payments, it’s important to consider what else your money could be doing for you.

The real question isn’t just about eliminating debt—it’s about opportunity cost. Should you put extra cash toward your mortgage, or could that money be working harder for you elsewhere?

A Mortgage Is Considered “Good Debt”

When deciding whether to pay off your mortgage early, it helps to compare it to other types of debt. Credit cards, for example, often have interest rates over 20%, while mortgage rates are typically much lower.

Plus, mortgage interest is still tax-deductible in 2025 if you itemize deductions. Homeowners can deduct interest on mortgage debt up to $750,000 for loans taken out after December 15, 2017. For older loans, the limit is $1 million.

However, these provisions from the Tax Cuts and Jobs Act (TCJA) are set to expire after 2025, meaning the deduction rules may change in the near future. If tax benefits are a key factor in your decision, it’s worth keeping an eye on upcoming policy changes.

On top of that, homes may appreciate in value over time, meaning your investment in real estate could grow even while you’re paying it off.

Would Your Money Work Harder Elsewhere?

Instead of putting extra money toward your mortgage, consider where else you could allocate those funds. Here are a few options that might provide greater financial benefits:

Retirement Accounts: Contributing to tax-advantaged accounts like a 401(k) or IRA can provide immediate tax benefits and long-term growth. If your employer offers a 401(k) match, that’s essentially free money you don’t want to leave on the table.

Emergency Savings: A fully funded emergency fund can provide financial security and flexibility, ensuring you’re prepared for unexpected expenses.

Investing in the Market: Historically, the stock market has offered higher returns than mortgage interest rates. If you’re comfortable with some risk, investing could potentially grow your wealth at a faster pace.

Other Financial Priorities: Paying off high-interest debt, funding a college savings plan, or securing long-term care insurance may take priority over an early mortgage payoff.

What If Your Mortgage Is Underwater?

If you owe more on your home than it’s worth, making extra payments may not be the best strategy. Instead, focusing on building savings, diversifying investments, or improving your overall financial stability could be a smarter move.

Over time, these efforts can provide greater flexibility and security.

How to Decide What’s Right for You

At the end of the day, the best decision depends on your financial goals, risk tolerance, and personal preferences. If being debt-free brings you peace of mind, paying off your mortgage early might be the right choice.

If you prefer to keep your money liquid and invest in higher-return opportunities, it may make sense to keep your mortgage and use your extra cash elsewhere.

There’s no one-size-fits-all answer. That’s why working with a financial advisor can help you weigh the pros and cons based on your specific situation.

Need Help Making the Right Choice?

If you’re unsure whether paying off your mortgage before retirement aligns with your long-term goals, we’re here to help. At Navalign Wealth Partners, we can walk you through your options and create a strategy that fits your financial future. Get in touch today to start the conversation.