Some baby boomers plan to say: 'Hello retirement. Goodbye mortgage.'

Many baby boomers - the 77 million adults born between 1946 and 1964 - are known for their fast-spending ways. But that's not to say boomers don't worry about their financial future. They do. In fact, many plan to celebrate retirement by retiring their debt.

More and more boomers are hoping to ensure a lower cost of living in their golden years by timing the payoff of their mortgage to the date of their retirement.

Is it smart?

It's a tough call. Pay extra on the mortgage, or put that money into stocks, bonds or even a side business?

Some financial analysts advise against using extra cash to pay down the mortgage. Despite our recent up-and-down economy, the market tends to do well over the long haul. Depending on circumstances, some homeowners might prefer the stock market or other investments over paying off the mortgage.

Still, paying off the mortgage appeals to more conservative investors - those willing to invest in a known entity, their house, as opposed to an unknown, the market. And for some, owning a home is the pinnacle of their financial goals.

But, as with any financial decision, there's more at stake than just the bottom line. Here's a look at the pros and cons of paying off the house before you leave the workplace:

The downside

• No interest deduction. Sure you're paying interest on your loan, but look what that saves you at tax time. Pay off your mortgage, and you'll miss the interest deduction. It's a big reason - possibly the biggest - many people choose not to pay off their loans. Once the mortgage interest deduction is lost, many taxpayers do not have enough other deductions to make itemizing worthwhile.



• Put to better use. If you use discretionary funds to pay off your mortgage, you may miss out on investment opportunities that will bring you a better return on your investment. A great deal depends on your age and your risk tolerance. It's a good idea to discuss your situation with your financial advisor to compare investment possibilities to paying off your mortgage early.



• Downsizing homes or neighborhoods that change. What if you pay off your mortgage then decide to downsize once you retire? What if your neighborhood is rezoned and that quiet park is now a strip mall - causing the value of your house to plummet? If you've invested your retirement in your home and situations like these occur, you could be in trouble.

The upside

• Interest savings.The fact is, if you pay off your mortgage early, you're likely to save thousands in interest on your loan. Here's an example:
  
  You have a 20-year mortgage with 15 years left on it. However, you're planning to retire in 10 years and don't want the burden of a mortgage during retirement. Look at the numbers:
  
  

  Amount of mortgage:	$100,000
  Interest rate:	6.5 percent
  Scheduled monthly payment:	$746
  Add $300 monthly:	$1,046
  Interest savings:	$20,816
  Mortgage shortened:	By five years and 11 months, meaning you’ll pay it off in nine years - one year before retirement.



• Access to equity. If you come under hard times, you'll have the equity in your home to borrow against.



• Peace of mind.The idea of living on a fixed income can be scary. Knowing you won't have a mortgage payment can reduce your anxiety.



• Easy savings.Some people know they won't invest extra money in a stock fund, but they have faith they'll write the mortgage check for a higher amount each month. If that's you, then paying off the mortgage might be wise.

Do the math

It's a good idea to stop and think about whether early payoff makes sense to you. Visit www.hrblock.com and use the mortgage calculators to see how you'll fare.

http://www.hrblock.com/mortgages/calc_tools.html.