paying off mortgage with 401K
Hi, we have $130K or 4 years left to pay off our mortgage. I am 69 and fully retired and my spouse is 65 who just had to retire from Nursing due to disability. We both collect both a pension and social security, her’s disability. Like I said, we have $130K left on our mortgage which has been going down steadily due to us paying extra monthly. All this paying extra is beginning to catch up with us and if we were to stop with the extra, we’d be looking at 6 years left. Needless to say, we’re fixed income. We have between us $450K 401K with fidelity. Should we pay off the $130K mortgage with 401K money in 2022 so we’d free up almost $4K monthly and have no mortgage obligation then and then look to move into a townhouse or a condomium in 2023. We are trying to ready ourselves by moving into a 1 story because my wife has trouble getting up and down stairs now. While it’d be tough for our 401K to decline $130K my wife says we’d get it back when we sell. Our house valued at $300-$350K and bought at $168K in the early 90s. What do you think? Thanks.
Terry Says
No,no no! You have it all wrong. NOW is the time to sell your home and pay off the mortgage — and use the balance of the equity to move into a new community. You would have trouble getting a new mortgage, so maybe put the money from the sale in the bank, and rent in a senior community or in an assisted living community. Do it now, while you are young enough to make new friends, and your wife is well enough to get around and make friends.
Keep your 40l(k) separate — but do consider rolling it directly into an IRA ROLLOVER account at Fidelity. Then you will have a wider choice of more conservative investments, including money market and perhaps an equity/income fund, than inside a 40l(k) –which typically has more aggressive investments designed for younger people.
