Fear of Bankruptcty Forces Consumers To Pay Down Their Mortgage Instead Of Saving For Retirement
November 22, 2006 |
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A study by the National Bureau of Economic Research shows families lose $1.5 billion annually by prepaying their mortgage instead of funding their tax-deferred retirement account. The study also shows that saving for retirement instead of paying off a mortgage does not increase your risk for default.
If you lose your job and can't make your mortgage payments you can always withdraw from a tax-deferred retirement account to make your mortgage payments. If your financial situations worsens and you do need to file for bankruptcy, your retirement account is protected under the new bankruptcy laws.
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