I’m 59, still owe $81K on my mortgage, and all I want is to retire — but is that dream slipping away from me?

In 2024, homeowners aged 55 to 64 had a median mortgage debt of $216,873, while also racking up $302,403 in combined debt, according to Loans Canada.

So, should Brenda keep working to avoid lingering debt in her later years?

Pros and cons of paying off your mortgage before retirement

Whether or not you choose to pay off your mortgage before retiring often comes down to personal choice, regardless of whether or not it’s the best financial move.

For some, the peace of mind that comes from not having a large outstanding debt in retirement outweighs any financial downsides.

After all, as long as you’re carrying a mortgage, there’s always some risk of foreclosure — and if you’re out of the workforce, this can be much harder to recover from.

The decision isn’t clear cut. Since housing costs are lower when you no longer have a mortgage, paying it off may free up cash for other expenses.

On the other hand, using a large chunk of your retirement savings to pay off your mortgage may reduce the monthly amount you can withdraw from in retirement and hurt your cash flow more than having a mortgage payment would.

Also, the money you use to pay down the mortgage goes toward your home equity, which isn’t easily available for cash flow.

Relative returns play a big part

It may not make sense to pay off your mortgage if your potential investment returns are higher than the interest on your mortgage. In other words, you may not want to pay down a 5% mortgage with money that could be earning 8% if it stays invested, advised Dana Anspach, founder of a financial advisory firm in an interview with U.S. News & World Report.

However, “while it’s possible to make more money in the market than paying off your mortgage, it’s not guaranteed,” Jay Zigmont, founder of Childfree Wealth told the saem outlet. He tells clients to “look at paying off their mortgage as a tax-free, risk-free return of the interest saved.”

But not all advisors agree. “Paying off the mortgage at retirement is rarely beneficial,” David M. Williams, director of planning services for Wealth Strategies Group, told insurance provider MassMutual in March. “Maintaining and managing a mortgage may actually improve retirement cash flow.”

The decision also depends on your individual situation.

If you don’t have investments and are relying solely on the Canada Pension Plan (CPP) for income, then it can make sense to work a bit longer and try to pay down the mortgage for your peace of mind and the extra retirement cash flow this could bring.