COSTLY MISTAKES
THE DOWNSIDES OF EARLY PAYOFF
FROM BALTIMORE WASHINGTON FINANCIAL ADVISORS
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with Sandy Hornor | CEPS
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and
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About This Episode
For many homeowners, paying off the mortgage feels like the ultimate financial milestone. But doing it too early can sometimes create unintended consequences. In this episode, BWFA’s Sandy Hornor, Jr. and Tyler Kluge explain why paying off your mortgage may not always be the best move in retirement.
Full Description
Owning a home free and clear is a common financial goal. It provides emotional satisfaction, eliminates a major monthly bill, and can feel like the ultimate symbol of financial security. Yet for retirees, rushing to pay off a mortgage can be a costly mistake if it disrupts cash flow or limits investment opportunities.
In this episode of Healthy, Wealthy & Wise, BWFA’s Sandy Hornor, Jr. and Tyler Kluge explore the trade-offs of using retirement funds to eliminate mortgage debt. They explain how withdrawing large sums to pay off a loan can trigger higher taxes, reduce liquidity, and leave less money invested for growth. While debt-free living has its appeal, it may not always align with long-term financial health.
Listeners will hear why context matters—interest rates, tax brackets, and income sources all play a role in whether paying off a mortgage makes sense. Sandy and Tyler share examples of retirees who balanced a modest mortgage with strong investment growth, ultimately ending up with more flexibility and wealth than if they had paid off the loan immediately.
The key lesson is that mortgage decisions should be made within the larger framework of a retirement plan. By weighing both the financial and emotional aspects, retirees can choose the approach that provides confidence today while protecting future stability.
For more guidance, visit BWFA’s Financial Planning Services.
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