I’m 64 years old and I want to retire, but with a $185K mortgage, I’m terrified my savings won’t last. What to do as soon as possible

For decades, the retirement script was simple: the mortgage would disappear, expenses would fall, and savings would finally have room to breathe.

However, consider a hypothetical retiree, Tom. He is 64 years old and plans to stop working at 66, but he still owes $185,000 on his mortgage. Your monthly payment, including taxes and insurance, is $1,650. He has about $720,000 saved in a 401(k) and an IRA and expects about $2,600 a month from Social Security once he claims benefits. On paper, he has done many things “right.” In practice, that mortgage payment looms large and your dream retirement scenario is in jeopardy.

Tom’s concern is becoming more common. More and more older Americans are retiring with housing debt (1), higher insurance costs, and growing uncertainty around health care and inflation. And for them, the long-held assumption that retirement will be cheaper than working life no longer seems reliable.

In the past, carrying a mortgage into retirement was often framed as a lack of planning. Today it is an economic reality.

Some homeowners refinanced during periods of low rates and chose to invest extra money rather than speed up payment. Others grew larger later in life, helped their adult children (2), or endured job losses, medical costs or divorces that delayed freedom from debt.

For some retirees, keeping a mortgage may make sense. If the interest rate is low and investments generate returns greater than the costs of the mortgage, keeping the loan can preserve liquidity. Mortgage interest can also be manageable relative to income, especially when combined with Social Security and pensions.

But the downside is obvious: Fixed monthly payments don’t go away just because paychecks go away.

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A mortgage becomes a greater risk once income moves from earned wages to a combination of Social Security and savings withdrawals.

In Tom’s case, that $1,650 payment consumes a significant portion of his expected monthly income. That means larger withdrawals from retirement accounts, which can accelerate the depletion of your portfolio, especially in early retirement, when sequencing of returns risk means the possibility that poor investment returns in the early stages of retirement (or just before) will permanently damage your portfolio (3).

Housing costs also tend to be sticky. While commuting and work-related expenses decrease, property taxes, insurance, maintenance and utilities often increase. Add to that rising health care premiums (4) and out-of-pocket costs, and the idea that retirement spending automatically falls can quickly crumble.

That’s why trust is important. It’s not just a question of whether someone can make the payments today, but whether the plan still holds at age 75 or 85.

Many people underestimate how flexible retirement planning at age 60 can still be.

One option is to delay retirement, even briefly. Working an extra year or two can have a huge impact: more time for your 401(k) to compound interest, fewer years for your portfolio to support, and a higher Social Security benefit (5). For someone who has a mortgage, those extra years of income can significantly reduce pressure on withdrawals.

Another option is to restructure the housing situation. That doesn’t automatically mean selling. Some homeowners explore the possibility of refinancing to a longer term to reduce monthly payments, even if that means paying more interest over time. Others consider downsizing, moving to a lower-cost area, or freeing up equity to eliminate the mortgage entirely.

There is also the question of how retirement income is used. Mortgage lenders generally accept Social Security, pensions, and required minimum distributions as qualified income, which can be important if refinancing is part of the plan. But more generally, retirees should think about cash flow, not just net worth. A plan that looks solid on paper can seem fragile if the monthly obligations are too rigid.

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Market (1); Pew Research Center (2); United States Bank (3); AARP (4); ASS (5).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.