People get very emotional when it comes to debt; we now have a bit more insight into why. Although it has been well-known for some time that debt has an overall negative impact on health in older Americans, a new study out of Boston College’s Center for Retirement Research explored whether the amount or type of debt made any difference. The study found that while secured debt (e.g., car loans) has a limited negative impact on health outcomes, unsecured debt (e.g., credit cards, student loans) has a substantial negative impact. The study also showed that the more debt one carries, the more detrimental it is for older adults’ health. For example, higher mortgage debt has been linked to a higher incidence of hypertension and depression.

With my clients, especially those nearing retirement, I often see a desire to pay off mortgage debt early, even though they may have locked in a very low mortgage interest rate. Clearly, as the Boston College study shows, there is a very real “psychic” benefit of removing debt from your balance sheet that can even translate to your physical health.

So, from a financial planning perspective, if you’re in your 30s or 40s and preparing to take on a home mortgage, you might consider when you plan to (or would like to) retire and structure the mortgage term to align with this date. This could mean shortening your loan term from 30 years to 20 or even 15 years. While the conventional wisdom would be to take the 30 year loan term when you can lock in interest rates well below what you would expect to achieve via portfolio returns, you might feel much more secure in your retirement without a mortgage payment hanging over your head, and that feeling of security can be worth a lot!