Personal Investment & Financial Planning Q`s/Paying off mortgage
My husband and I will be retiring his year. We'll collect Social Security and we both have pensions. We have approx. $470,000 in a 401k. We have no debt except a remaining balance on our mortgage of approx. $29,000. My question is: Upon retirement should we take money out of our investments and pay the remaining balance on the mortgage or should we just continue to make monthly payments? Right now we do pay approx. $300 extra on the principal.
Thank you for your help.
Hi. Congrats on approaching retirement! The financial answer to this question depends on the interest rate you are paying on the loan, the value of the tax deduction you get from the interest you are paying on the loan and whether or not you expect you can earn more on your $29k by having it sit in investments than it cost for the loan. If you can earn more on the $29k by investing it than it costs you to have the loan then you should not pay off the loan. However, often times when people approach and enter retirement, they like the feeling of having no debt and if this brings comfort, then I do not feel making the decision based only on the financial aspect is the right thing to do. With a $29k mortgage, the financial benefits you are getting from the interest deduction I am assume are negligible and therefore if it were me I would make the decision based on what makes you feel most comfortable. I hope this helps!