There are many reasons why people decide to buy a second home for retirement.

For many retirees, a second home can offer a way to stay in a comfortable and familiar neighborhood and at the same time offer an opportunity to start out on a new adventure in a new home in a new destination.

Florida has been the destination of choice for American retirees for many years and its popularity continues to gain momentum, with 1100 persons a day moving permanently to enjoy the all important sunshine.

Buying a second home can also make a centerpiece to your retirement plan. It forces you to make regular savings in the form of mortgage payments that become your equity.

You only need cash for the down payment, and you should make sure that your monthly rental payments will cover the mortgage and any additional expenses. This is a real possibility if you buy the right house at the right price because a good single-family house should always stay rented. Your investment money is subject to less income tax, and the interest and property taxes may be deductible.

Preparing for retirement? What to do with your mortgage?

It is believed that the perfect situation to be in when it is time for retirement is to be free of debts. But nowadays this often seems to be impossible.

Here are some things to consider when deciding what to do with your mortgage during retirement:

In performing a cost-benefit analysis you need to look at where the money you´ll use to pay off your mortgage is coming from and what that money could be used for instead. You need to consider that your financial picture might be brighter by not paying off your mortgage!

For example: Instead of paying off your mortgage at 6 % you could put that money in an investment portfolio that earns 8 %. In this case, it would make sense to keep your mortgage. If you are risk-adverse and put more money in bonds, your guaranteed lower rate of return may indicate that it is better for you to pay off the mortgage.

Another thing to consider is the possibility of tax implications. The interest portion of mortgage payments is tax-deductible. So you should take into account if you are able to benefit from this tax-deduction.

In conclusion, you have to consider how tolerant of risk you are and what other factor should take influence on your decision.