Retirement planning rules tend to be very specific to individuals financial situation, lifestyle, retirement plans and location. But there is one rule experts tend to agree on: Pay off your mortgage before entering your golden years.

When you look at where Americans spend their money, 30% to 40% is on housing, says Joseph Montanaro, a certified financial planner at USAA. When you look at retirement, you can create a much smoother income plan when you dont have that requirement. For retirees, reducing fixed expenses like housing provides more financial flexibility and less stress on an investment portfolio.

Most people in retirement are on a fixed income made up of savings, investments like a 401(k) or IRA, Social Security benefits and pensions. Not having to worry about making monthly mortgage payments can provide peace of mind, says Michael Eisenberg, a certified public accountant in Los Angeles.

Not having a mortgage payment will also free up cash flow. When you retire, the outflow of dollars changes as you may have other expenses, such as elevated health- care costs and discretionary goals. If you sell the house, all that cash will be available for other purposes, says Eisenberg.

If you dont sell your house, there still are other things you can do with that asset if necessary. In retirement, you cant get unsecured debt because you dont have any income, says chartered financial analyst Robert Stammers, director of Investor Education for the CFA Institute. You can get secured debt, and youll have your house.

How to Pay Off Your Mortgage

Before working to pay off your mortgage beyond the monthly payments, Stammers suggests eliminating other consumer debt like outstanding credit card bills and creating an emergency fund that covers six months of expenses.

When determining the best way to pay your mortgage early, experts recommend keeping your available cash in portfolio accounts. If youre going to liquidate your accounts to pay off your mortgage, ask whether it makes sense to use that money and leave yourself with no cushion, says Eisenberg. Youre leaving yourself cash poor.

Experts also recommend diverting extra cash to pay off your mortgage while youre working by changing the amount and when you pay, here are a couple options:

Accelerated Mortgage Payments. Split your mortgage payment in half and make payments every two weeks, says Stammers. Youre matching your payments with your cash flow, and youll make an extra two payments [or one monthly mortgage payment] each year. If you have a $225,000 mortgage at 5% for 25 years, for example, by paying your mortgage biweekly, you can shorten your mortgage by about three to four years and save about $28,000 in interest payments.

Continued here:
How to Pay Off Your Mortgage Before Retirement