What to do as retirement nears

Pay off the house — or not

The traditional advice has been to pay off your mortgage, if possible, before retiring. But the real estate market bubble, followed by the crash of 2007, has made that decision more complicated.

Many people took out sizable home equity loans before 2007, making it unlikely they can pay off their homes soon. At the same time, mortgage rates remain very cheap by historical standards.

If you’re close to paying off your mortgage, it can still make sense, reducing your monthly expenses significantly while also providing a sense of security.

But if you still have a lot of time on a mortgage, then you should consider refinancing, even extending the term.

“Locking in a low, fixed, long-term rate might be he best move,” says Greg Womack, a certified financial planner in Edmond, Okla. “It could lock in this part of your living expenses for a long time, and (free up money) to earn higher rates of return from investments.”