Mortgage Payoff?
Im 74 years old and work part time, collect social security and RMD’s. I have $150k chicken money (it’s currently in a 4% saving acct)and am trying to decide the best investment. Should I pay off my mortgage ($108,000 with a 7.25% interest)? Or open a Roth IRA to see if it could exceed the 7.25%? Open to all options, thank you.
Terry Says
I think it’s a bit late to open a Roth IRA, because you don’t want to speculate with the money, and have limited time for tax-free growth.
Have you reviewed all your potential needs for cash — medical expenses, premiums for insurance, the possibilities of needing help in your home?
If so, and your income and RMDs will cover the basics, then — since your mortgage is higher than any safe earnings, you could pay down perhaps $58,000 of that mortgage, lowering your balance to just $50,0000.
And then you could keep paying your current monthly mortgage payment amount, thereby paying off the balance more quickly. Ask your lender to calculate how long it will take to pay it off if you keep making the current full payment, with a balance of only $50,000.
Remember, you won’t easily get a home equity loan, once you stop working. And it is always wise to have some chicken money in CDs.
