From the NYT:
Paying off the mortgage isn’t the priority it once was, and for many households, it isn’t even a possibility. But a new report from Harvard University’s Joint Center for Housing Studies reaffirms the common belief that retirees who own their homes outright are considerably better off than those carrying mortgages or paying rent.
The report, called “Housing America’s Older Adults,” focuses on the changes needed to supply sufficient affordable housing for the country’s 50-and-over population, which is projected to increase about 20 percent by 2030. The report found that paying off a mortgage dramatically reduces housing costs and provides an equity cushion to help cover other major expenses.
About a third of mortgaged households between the ages of 50 and 64 are moderately to severely burdened by housing costs, which include property taxes, insurance and utilities, the report said. (Moderately burdened is defined as spending 30 to 50 percent of income on housing costs; severely burdened households dedicate more than half their income to housing.)
But among similarly aged homeowners without mortgages, only 12 percent are cost-burdened.
Because income declines with age, the housing burden rises dramatically for households aged 80 and over. Nearly two-thirds of these households still paying mortgages are cost-burdened, compared with less than a quarter of homeowners over 80 without mortgages.
Lower-income renters are in the worst financial position. Some 77 percent of renters over 50 with annual incomes below $15,000 are cost-burdened, as well as about half of those with incomes from $15,000 to $29,999. Unlike homeowners, renters lack an equity cushion to ease the strain.
“Those groups are going to struggle through much of their retirement years,” Mr. Herbert said, “and at the end have very little to draw upon.”
Among baby boomers with mortgage debt, more are carrying it into retirement. As of 2010, 40 percent of households 65 and up were still paying a mortgage, compared with about 18 percent in 1992, according to the report.