Mortgage Payoff
Hi Terry, My husband and I are recently retired. Our biggest expense is a term life insurance policy that we started about 30 years ago. If we pay off our mortgage of $65,000 we can cancel the policy and also save the monthly mortgage payment. I have a savings account that will cover the mortgage pay off. Do you recommend paying it off? We also have a decent retirement savings account.
Terry Says
That all depends on the rate on your mortgage. If it’s below 4.5% then you do not want to prepay it. And it also depends on whether that wipes out all your liquid savings.
But that term policy must be incredibly costly right now. Is it on your husband’s life?
There is no cash value, so you can stop paying it at any time. The survivor will probably sell the house and get the net proceeds after the mortgage is repaid — so the term life policy likely doesn’t make financial sense.
I think you could benefit grom a review of your entire financial situation by a fee-only fiduciary planner you can trust. Read this to find one. All of these decisions need to fit into an overall plan for retirement income and security.
