Are you approaching retirement but concerned that you still have a mortgage? If the answer is yes, you are not alone. There are many reasons why more Australians today are still paying off a mortgage later in life ranging from getting into the market later and going through a divorce to changed work and business situations. People today are also living and working longer and banks have relaxed the rules around having to repay debts before retirement age.
That being said, having a mortgage hanging over your head when you retire is less than desirable because it will limit what you can do when you have all the time in the world to do it. So here are a few tips to help you clear your mortgage and be debt free in time for your retirement (as long as the money you save is put straight into your mortgage).
- Increase your income
This may be easier said than done but there are ways to do this if you think outside the box. You could approach your boss about a raise or a promotion if you can prove you’re worth it. If you run a business you could take on an extra job or two per week. You could even consider renting out a room in your home or get an Uber licence for some extra cash each week.
- Lower your spending
As you approach retirement it is the ideal time to take a close look at your current spending habits and redo your budget if you have one. Not only will this help you work out where you could save money now, it will also give you an idea of how much you will need to live comfortably when you’re no longer working.
- Work longer
We are living longer these days and, generally speaking, ageing better. There is no hard and fast rule stating that you must retire at a certain age. If you still feel fit and well and enjoy what you do, why not work beyond the official retirement age, especially if you still have a mortgage to repay? Or perhaps you could consider semi-retirement. Whatever works for you and helps you move into retirement comfortably.
Do you really need to hold onto the home you raised your children in anymore? Depending on your equity, downsizing to a smaller, cheaper home could clear your mortgage completely. And it would be a lot easier to maintain as well!
Tap into your Super
Under the current Superannuation rules, you can access your super without paying additional tax if you’ve reached your preservation age and use these funds any way you choose, including paying off a debt.
The earlier you plan a course of action to pay off your mortgage the better. But as you can see in this article, even if you are approaching retirement with a mortgage, all is not lost. There are many positive steps you can take now to retire debt-free.