I was recently asked this question earlier this month at a workshop I hosted, pertaining to retirement income planning, at the Cresskill Public Library. The old philosophy was if you have a mortgage, you still should be working. An Investopedia article from October 2012 says that the new trend of carrying debt into retirement could be the new normal, as cost of living and healthcare skyrocket, little financial planning, unforeseen emergencies, and less desire to downsize overtakes boomer’s retirement plans. The Record, a northern New Jersey newspaper, also ran an article last year on this topic; The Record reported that paying off the mortgage before retiring makes sense.
Of course removing mortgage debt before you retire will make things easier, however I think if you properly plan and account for the mortgage expense it is OK to retire with one. In The Record article above an AARP representative states that the mortgage is a predictable expense and because of that it should be eliminated before retiring. I tend to disagree with her statement. Because the mortgage payment is predictable, it can better be planned for than if it was a variable expense. Now if you retire with a mortgage and do not put a plan together that details where your income is going to come to pay for this expense, once you stop working, then all bets are off.