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Every homeowner has the same recurring dream: the mortgage is paid off and you’re free of monthly payments.

Then you wake up. A big chunk of your payment, you realize, is for escrow accounts to pay for property taxes and homeowner’s insurance. Those will still be there long after the mortgage is retired, along with maintenance and repair costs.
So how does this figure into long-term plans for things like retirement?

The first step is to look at the most recent annual statement from your mortgage lender to see how much of the payment is for the loan, how much for taxes and insurance.

Imagine you have a new 15-year fixed-rate loan for $300,000. With rates on these loans averaging about 4.8 percent, according to the BankingMyWay.com survey, the Mortgage Loan Calculator say’s you’d pay $2,341 a month.

Insurance premiums and taxes vary widely depending on where you live and other factors. But suppose insurance cost $100 a month and property taxes $500. You’d write a $2,941 check to the lender every month.

In 15 years, you’d be rid of the principal and interest payment. If tax and insurance costs rose at a typical inflation rate of 3 percent a year, today’s $600 escrow payment would balloon to $935 in 15 years, according to the Savings, Taxes and Inflation Calculator, a jump from $7,200 a year to $11,220. Of course, those costs would probably continue to go up after that.

Since retirees are often on fixed incomes, these ever-increasing costs can seriously erode household finances. Many older people resort to moving to properties that are less expensive or are located in low-tax communities.

But that’s often an unwelcome option. One alternative strategy is to try to reduce these expenses now, allowing you to set aside more for long-term savings that could be tapped for insurance and taxes in retirement.

Your county, school district or municipality will have a process for appealing the tax assessment, which is based on the property’s estimated value. Since housing prices have been dropping in much of the country, you might be able to demonstrate that your home is not worth as much as the tax folks say it is.

Start with a property-valuation service like the one on Zillow.com. Be sure the “comparable” properties are really like yours, and reject sales prices that are more than six months old, since prices are changing rapidly.

Also make sure the tax office has a correct description of your property.

If you are in your 60s or older, ask if there is a property tax break for senior citizens. Many communities have them. And if you’re younger, make a note to do this later.

There are many ways to reduce homeowner’s insurance premiums. You could opt for a larger deductible, agreeing to pay the first $1,000 in damages rather than the first $250. You can install smoke detectors, a burglar alarm system and deadbolts.

Improving your credit score also can reduce your premium, as can consolidating all your insurance policies with one firm. Again, there may be a senior-citizen discount.

Of course, it also pays to shop around. Even if you got the best deal available when you bought the house, other firms may offer cheaper policies now.

Use the BankingMyWay.com shopping tool to track down a good deal among top-rated insurers. Be sure to look at the lesser-known firms in addition to the biggies like AIG (Stock Quote: AIG) and MetLife (Stock Quote: MET) and Geico (Stock Quote: BRK.B)

— For more ways to save, spend, invest and borrow, visit MainStreet.com.