Many baby boomers are choosing to work a few years longer than the previously planned retirement age. There are a few advantages of that. First of all, you keep contributing to your 401K or IRA which helps building or recovering some of the losses you had in the past few years. Second, with a steady paycheck, you can pay off or at least pay down your mortgage. Many seniors are still carrying their mortgages well into retirement. It’s not a good idea. You want to be mortgage free in retirement. There have been cases where retirees find themselves in a bad financial situation with mortgage troubles. That’s the last thing you want in a happy retirement.
If you’re approaching the retirement age and have the extra savings that are sitting in a savings account or CDs, it is a better idea to dump these funds into your mortgage. Because the interest you earn on these are only 1% or 2% currently. Many people argue that you could invest the money and get better return. That’s true for someone who’s in his 30s or 40s. Not if you’re approaching retirement.