I’m a 67-year-old retired single and are getting $3,100 per month from my pension and after taxes, and $2,100 per month from Social Security. I have around $100,000 in mutual funds/savings accounts and $500,000 in my 401(k) account.
I am comfortable with my monthly income but I’m considering paying off my mortgage early. I have five years left to pay, and I’m undecided if I should use my savings to pay off the remaining $57,000 on my mortgage. I own a house worth $275,000 and pay a monthly mortgage of $800. I am not sure if I should continue to pay a monthly mortgage until I have to move into a house with no stairs.
Thank you for any advice you may have. I am interested to know what others would do in a similar financial situation.
See: My wife and I are in our 50s with $300,000 in a 401(k) and $700,000 in a pension. Will we have enough to ‘live a simple life’ in retirement?
Dear reader,
This is an age-old question and I’m glad you asked it. Many other retirees wonder the same thing.
The answer often depends on your personal situation and feelings about debt. If you can comfortably handle having mortgage debt, then there is no harm. And with your low-interest rate, manageable monthly payments, and already paid-off home, you are doing quite well. However, if you’re not comfortable carrying debt in retirement, it’s worth considering your options carefully.
Ultimately, you don’t want to deplete your retirement accounts for a mortgage you can afford. Before deciding, compare your mortgage interest rate with the potential return on your 401(k) investments — the higher return rate could make paying off the mortgage less appealing.