This is especially true of the next generation to retire
When Generation X homeowners are thinking about savings, their retirement is likely to be on their mind.
But this generation is the one most challenged by their monthly mortgage payments (82%) according to new research from Bankrate.com. Parents with young children (81%) and millennials (78%) are also challenged.
Overall, 77% of respondents said their mortgage payment means they have nothing to save.
The survey shows that 39% of respondents say the equity in their home is greater than the balance of their retirement savings accounts while 28% said the opposite. Among those that own their home without a mortgage, 38% have more equity in their home than their 401K or IRA.
“One-in-five homeowners don’t know whether their retirement account balance is more or less than what they have in home equity, a possible disconnect to their own finances,” said Bankrate.com’s chief financial analyst, Greg McBride, CFA.
Refinance rather than pay-down
McBride added that homeowners should consider refinancing at a lower interest rate to cut their monthly mortgage payments are unlock cash for retirement savings.
“Don’t neglect retirement savings in a hurry to pay down or pay off a low rate mortgage. Money in a retirement account will pay the bills, home equity will not,” he concluded.
