Manage risk
Horses for courses really.
Agree with the stage of life sentiments expressed above. Everyone also has a different risk profile.
At age 60, Investor2009's employer/boss is looking to consolidate. Most of us would. Not all however. No one is right or wrong. It all depends on appetite for risk, past experiences and conditioning and stage of life.
Also there is nothing wrong with having a fuly paid off PPOR. I disclose now that I have NEVER had a mortgage on my PPOR. Our first home was one of my IP's that I had paid off, upgraded since by paying off the next one and leaving debt on IP's (never intended for our habitation) thereby optimising deductions.
Some would argue that we have wasted yet another asset that could be utilised as equity for a number of deposits. Not in my eyes. As evand has mentioned, the security this can create for family and as a hedge/buffer if other things turn sour is priceless. Not everyone may agree with this, however.
That's just me, everyone's different and should do what resonates with them, their age and stage of life and aspirations and tolerance for risk.
I have a plan to actually pay down all debt (and then some) by selling off a couple of pre-CGT IP's we have in a staggered process. After retiring all debt, the leftovers will be used to reward with some hedonistic pleasures and to wack in a trust for another (more CF oriented) purchase.
We can never let the opinions of others become our reality. We should play our own game according to our rules.
Debt is useful in helping us leverage, however not good (in excess) all of the time. Try having a lot of debt in the early nineties with rapidly rising interest rates and dwindling /softening prices/values pushing LVR's through the roof.