We have approx. 160,000 left on our mortgage, we have about 600,000 in investments. My wife and I also have about 75,000 in 401K. I would like to take about 50,000 and pay down our mortgage. We have a 15 year we are about 2 years into it. We are paying about $250.00 per month additional. in an effort to pay off the mortgage ASAP. Our mortgage is at 3%. I am 64 and my wife is 62. We both hope to work for at least another 3 years full time. I plan on continuing to work part time after I retire. Is it wise to pay down the 50,000 now?
Terry Says: Well, a 3 percent rate is a great deal. And if you invest wisely, you should be able to earn more than that — although with some risk. I know and share your feeling that it would be great to go into retirement with no mortgage! I have always advised that. So it’s a great goal. But I think the better way to do that is to keep paying the extra amount every month — and to agree that each of you will work until the mortgage is paid off! In fact, you can ask your bank to give you a new amortization schedule that shows how long it will take to pay off your loan if you keep adding the $250 per month. I bet you’ll be surprised at how quickly it can be paid down. Then you will retire with your investments intact — and no mortgage. That’s a far better scenario — a great discipline for both of you!