---

Paying off the mortgage before retirement can substantially reduce the amount older Americans need to save, but it does not eliminate housing expenses or the importance of location.

A new Investopedia analysis estimates that a single retiree who owns a home free and clear needs about $693,000 in financial assets to retire comfortably. A mortgage-free couple needs approximately $870,000.

Those national figures hide large differences among the states.

For a single retiree, the estimated savings requirement ranges from about $572,000 in Arkansas to $909,000 in New Jersey — a difference of $337,000. Couples would need between roughly $700,000 and $1.18 million, depending on where they live.

The study found that Louisiana, North Dakota, Mississippi, and Tennessee joined Arkansas as the least expensive states for single mortgage-free retirees. Each had an estimated savings requirement below $590,000.

At the other end of the scale, New York required about $840,000 for a single retiree, followed by Washington, D.C., at $834,000; Massachusetts at $826,000; Connecticut at $819,000; and New Hampshire at $814,000.

---

Why a paid-off house still costs money

Mortgage-free does not mean housing-cost-free. Retirees must continue paying property taxes, homeowners insurance, utilities, repairs, and in some cases, condominium or homeowners association fees.

Investopedia said those ongoing expenses for older mortgage-free homeowners range from about $398 a month in West Virginia to more than $1,200 in New Jersey.

Insurance and taxes can also increase over time. Older homeowners should build room into their budgets for major repairs, including roof replacement, heating and cooling systems, and accessibility improvements.

Still, eliminating the mortgage creates a sizable advantage. Investopedia cited Census Bureau data showing median monthly housing costs of $658 for homeowners without a mortgage, compared with $1,736 for those still making mortgage payments.

Nearly 80% of households headed by someone 65 or older own their homes, and almost two-thirds of those homeowners have no mortgage, the study said. However, carrying housing debt into retirement has become more common. The share of homeowners age 65 and older with a mortgage rose from 13% in 1980 to 36% in 2024.

---

How the estimates were calculated

Investopedia combined state-level living expenses with average Social Security benefits and then applied the commonly used 4% withdrawal rule.

The model assumed an average annual Social Security income of $23,704 for a single retiree and $37,713 for a couple. Savings would cover the remaining annual expenses. Dividing that shortfall by 4% produced the estimated nest egg.

For example, if Social Security left a retiree with a $24,000 annual shortfall, the 4% formula would suggest savings of $600,000.

The calculations count financial assets but do not include the value of the retiree’s home.

The results should be viewed as planning benchmarks rather than guarantees. Actual needs will depend on a household’s Social Security benefit, retirement age, health expenses, taxes, lifestyle, and investment performance. The 4% rule is also a general guideline and may not be appropriate for every retiree.

For older adults considering a move, the study offers a larger lesson: paying off the house helps, but choosing where to live can be almost as important. Before relocating, retirees should compare not only home prices but also property taxes, insurance premiums, healthcare access, and the cost of maintaining the property.