Episode 66: Should You Pay Off Your Mortgage Before Retirement?

Published May 4, 2026

For many Canadians, entering retirement mortgage-free feels like the goal — but is it always the right move?

In this episode of Money Monday, Darren Devine, Financial Planner with Sun Life and President of Devine & Associates, explores one of the most common questions Canadians face as they approach retirement:

Should you pay off your mortgage before you retire?

While the idea of eliminating debt can feel reassuring, the right decision depends on how your mortgage fits into your overall financial strategy.
This episode helps you consider:
→ The benefits of entering retirement with reduced or no debt
→ The opportunity cost of using savings to pay down your mortgage
→ How mortgage payments compare to other income needs in retirement
→ The role of interest rates, investment returns, and cash flow
→ How this decision fits into your long-term retirement plan

For some, paying off a mortgage provides peace of mind. For others, maintaining flexibility may be more valuable.

The goal isn’t to follow a rule — it’s to make a decision that aligns with your financial plan and the way you want to live in retirement.

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Money Monday Related Episodes

Deciding what to do with your mortgage is just one part of building a retirement plan that supports your lifestyle, income, and long-term goals.
If you’re thinking about how debt, income, and planning come together, these Money Monday episodes offer helpful perspectives.

Episode 16: Pay Down Debt vs Investing
A foundational look at how to balance debt repayment with long-term investing decisions.

Episode 42: The 3 Things Every Ontario Homeowner Needs to Know Before Downsizing
Housing decisions can play a major role in retirement planning. This episode explores how your home fits into your financial future.

Episode 56: What Will Your Paycheque Be in Retirement in 2026?
Understanding your retirement income can help you decide how mortgage payments fit into your overall cash flow.

Episode 49: New Year, New Budget: How Retirees Can Help Beat “Creeping Costs”
Looking at your spending habits can help you evaluate whether paying down debt or maintaining flexibility makes more sense.

Episode 20: Spending vs Budgeting: Aligning Your Values and Goals to Your Finances
Financial decisions often come down to priorities. This episode helps connect your spending choices to your long-term goals.

Should You Pay Off Your Mortgage Before Retirement?

Presented by Darren Devine, CFP®, CLU®, Financial Planner, Sun Life and President of Devine and Associates Financial Services Inc.

Imagine this:
You’re 62.
Retirement is two years away.
You have enough savings to write one big cheque… and wipe out your mortgage completely.
It sounds like freedom.
But what if that decision quietly costs you hundreds of thousands of dollars over retirement?

Hello, and welcome to Money Monday, where we help simplify your financial journey.
I'm Darren Devine, Financial Planner with Sun Life and President of Devine & Associates. I’ve been helping families across Ontario plan, protect, and enjoy their retirement income for over 20 years.

And this question — whether to pay off your mortgage before retirement — comes up almost every week.

Because it feels obvious.

But it’s not always that simple.

Let me tell you about a couple I’ll call Susan and Mark Jenkins.

  • They’re both 60.
  • They’ve done well.
  • Their mortgage balance is about $180,000.
  • Their investments are strong.

And Susan says,

“I just want it gone. I don’t want a mortgage payment in retirement.”

That feeling? Completely valid.

But here’s where we slow things down.

1. The Emotional Side

There is real psychological relief in being mortgage-free.
Lower monthly expenses.
No required payments.
A sense of control.
For many people, that peace of mind has real value.
But we can’t stop there.

2. The Math - Cost of Opportunity

In Susan and Mark’s case, their mortgage rate was 3.2%.
Their long-term portfolio projection? Around 5–6% over time.
If they pulled $180,000 from their investments to eliminate the mortgage, that money would no longer be compounding.
Over 20–25 years of retirement, that growth gap can be substantial.
That’s opportunity cost.

It’s not just about the payment — it’s about what that money could have become.

3. Liquidity in Retirement

Another important piece most people overlook?
Flexibility.
If you use a large lump sum to eliminate the mortgage, that money is now tied up in your house.
In retirement, liquidity matters.

You may want:

  • Travel flexibility
  • Help a child with a down payment
  • Cover unexpected health expenses
  • Navigate market volatility

Home equity is not the same as accessible cash.

4. Tax Considerations

And then there’s tax.
In Canada, mortgage interest on your principal residence isn’t deductible.
But withdrawing large sums from an RRSP to pay off a mortgage could create a significant tax bill in one year.
That tax impact alone can change the decision.

So What Happened?

In Susan and Mark’s case, we ran the numbers.
Instead of eliminating the mortgage entirely, we built a structured retirement income plan that maintained manageable payments while keeping their portfolio invested.

  • They still retire comfortably.
  • They keep flexibility.
  • And the math works in their favour.

But for some families, paying off the mortgage absolutely makes sense.
This isn’t about right or wrong.
It’s about coordinated planning.

If you’re within five years of retirement and wondering whether you should eliminate your mortgage before you stop working, don’t guess.
Run the strategy.

Because retirement isn’t just about being debt-free.
It’s about being financially confident.

Thanks for tuning into Money Monday. Don’t forget to like and comment for more episodes filled with tips to help make your financial journey a breeze. Until next time, I'm Darren Devine, and you can always talk to us today at DevineAndAssociates.ca!

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