People walk past a mortgage advertising stand.
People walk past a mortgage advertising stand. - 
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Let's say you’ve followed all of the advice we’ve gone over this week and you’ve built a solid nest egg for retirement. Congratulations! But what do you do with your house?

Traditional advice says you should pay off your mortgage when you retire. But since the recession, millions of people can’t afford that. In 1989, about 25 percent of people retired while still owing money on their homes. That number jumped to 46 percent in 2007.

Karin Price Mueller is a personal finance columnist for the Star-Ledger in New Jersey. “Maybe they couldn't afford to pay off their mortgages, but we're also not talking about 9 or 10 percent interest [rate] on mortgages either,” Mueller says. “So, they really are more affordable.”

It can be scary to have those mortgage payments looming over your head when you leave the workforce, but for some, it can be the better choice.

“What you don't want to do is take all of your available cash to pay off the mortgage, leaving you with absolutely no safety net,” Muller says. “Because then what happens if you need a new roof? Are you going to use a credit card to pay for it?”

The next step is to compare your rate of return on investments to the interest rate on your mortgage. “Remember that you are getting some additional tax advantages because of the deductions from mortgage interest,” Mueller says. "Compare that with the money you're actually earning on your investments."

Before making any big decisions about your home or retirement, it’s wise to consult with a certified financial planner who can make sure you’re making the best choice. “You also want to sit down with an adviser, because once you make the move … you're not going to be able to undo it,” Mueller says. “It could end up pushing you into a higher tax bracket, and you don't want to end up having one year where you're suddenly owing thousands of dollars to the IRS.”

For some, keeping up with mortgage payments while in retirement might not be worth the potential headache. In that case, Mueller says it’s best to go with your gut. “The first thing to consider when anybody is coming close to retirement or if you're in retirement already [is to] to decide what you're comfortable with,” Mueller says. “Peace of mind is really more important than the finances in a case like this. If you just feel nervous having any kind of debt, whether it’s the mortgage or you've got credit cards, if you don’t like seeing monthly bills coming in, or you worry about being able to pay for it, you just might be better off paying it off. It’s the only way to buy peace of mind really, and it’s well worth it.”

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Follow Lizzie O'Leary at @lizzieohreally