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For prior generations, paying off one’s mortgage before retiring was one of the thresholds for being able to have a financially secure retirement. Today’s retirees are less likely to achieve this milestone before they retire.

According to LIMRA Retirement Research and an AARP Public Policy Institute Study, millions of older Americans are carrying more mortgage debt than ever before. In 1989 the prevalence of mortgage debt for Americans age 65 to 74 was 22 percent. By 2010 mortgage debt for that age range nearly doubled, jumping to 41 percent. The amount of debt has grown, too. The median value of mortgage debt for people between the ages of 65 and 74 was $70,000 in 2010 compared to only $15,000 in 1989. (See charts)

Even for older Americans who have diligently saved for retirement, paying a mortgage long past age 65 puts a strain on the nest egg. Add to that rising property taxes and declining home values and the drag on savings becomes compounded.

Studies have shown that many older Americans use home equity loans to fund health care and other expenses. Others plan to sell their home and downsize to fund their retirement.

With the decline in home values, equity gets reduced making it harder for seniors to finance emergency needs.

While holding a mortgage does enable an interest rate tax reduction, the portion of the mortgage payment applied to interest declines as the final payment nears and reduces any tax benefit.

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