Ask Terry Questions 401K or Payoff Mortgage

401K or Payoff Mortgage

By Terry Savage on May 26, 2025 | Financial Planning / Retirement

Hi Terry,
My daughter and I saw you this afternoon at the Cornerstone shop in Lake Geneva.
Thank you for answering our questions about my 401K and her paying her credit card versus contributing to her 401K. We were on our way to lunch and came back for that second question.
I forgot to ask you one more thing,,,
Should I pay off my mortgage or keep contributing to my 401K?
I’m 62 and would like to retire by 68 if possible and then just work part time.
I have 200K in my 401K and moved it all to a Stable Value Fund.
I owe 190K on my mortgage and the interest rate is 3.25%.
I make 90k and am contributing 20% to my 401k. This 20% is going towards S&P 500 Index Fund.
Should I keep contributing to my 401K or should I put that 20% towards paying off my mortgage so it’s paid off when I retire? But, if I do that, I’ll only have that 200k in my 401K, but my mortgage will be paid off. If I don’t pay the mortgage off, I’ll have 500K in my 401K when I retire, but I’ll have a $1500 month mortgage.
Thank you!

Terry Says

Your 3.25% mortgage is a gift! Keep paying on it — and keep investing in the40lk plan — especially to get the match!

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