15 Jun Should I have a mortgage when I’m retired?

Q. I am 58. Should I buy a condo or keep renting? I’ve heard that when you retire, you shouldn’t have a mortgage. I want to retire at 65, and I will have a pension and Social Security to depend on.
— Still working

A. There are many factors to consider as part of the decision to rent or own a home.

Start by asking yourself if you need to live in a specific area.

“If so, by owning a place, you control where you live and how long you live there,” said Michael Cocco, a certified financial planner with Beacon Wealth Partners in Nutley. “When you rent, there is always a possibility that the building can be sold and your lease may not be renewed, forcing you to move at some point in the future.”

If you choose to buy a condo, there will be expenses beyond mortgage payments, including property taxes, insurance and possibly homeowner’s association dues, Cocco said.

When you add up all of these costs, they usually exceed the cost of your monthly rent, he said.

It’s true that you could build equity over time as the owner of a condo, which won’t happen when you rent.

But the most important question may be your cash flow in retirement, he said.

“If your pension and Social Security that you will largely depend on only barely cover your bills, then I would lean towards renting to help ease cash flow in retirement,” Cocco said. “However, if you have more than enough in retirement income and retirement assets to live comfortably, owning a place where you are building equity may have its benefits.”

So take a close look at your estimated cash flow in retirement so you can better understand your ability to meet your expenses and live comfortably.

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This story was originally published on June 15, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.