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Dear Liz: This is regarding the couple in good financial shape who asked if they should save more for retirement or focus on paying down their mortgage. I suggest you recommend that 60-year-olds pay off their mortgage under any circumstances. They can afford to miss out on investment income. They can’t afford to be stuck with a mortgage. I’ve read some sad testaments to this. To those telling you how many more years they plan to continue working, they should take into consideration that they may not be allowed to continue working.

Answer: It’s true that many people are forced to retire earlier than planned, but that in itself isn’t a reason to prioritize paying down a low-rate, potentially tax-deductible mortgage over saving more for retirement.

The two people in question were 50 and planning to retire in 10 years when they turned 60. They had no credit card debt or other loans except for a 15-year mortgage at 4.5%. If they’re in the 25% federal tax bracket and itemize their deductions, that would be an effective rate of just 3.4%. In any case, it’s a pretty cheap loan and one that would be paid off within a few years of their retirement. They almost certainly would be far better off taking advantage of opportunities to put more money into 401(k) accounts and Roth IRAs.

Focusing on paying down a mortgage may seem like the smart choice because it saves on interest, but it can leave people poorer in the long run if they’re ignoring opportunities to get retirement account matches, tax breaks and better returns on their money.

Since everyone’s situation is different, though, they’d be smart to find a fee-only financial planner to offer personalized advice.

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