Should I pay off my mortgage?

Hi Terry, I am questioning on whether I should pay off my mortgage ($32,000). Currently my monthly mortgage payment is $900 (P&I – 4% interest rate). I am 61, with a 401K and pension available and plans on retiring in about a year. I have around $150,000 in available cash. Other than the typical homeowner expenses, I have no other outstanding debts. I probably will be in the market for a new car next year. Also, there is a good chance I may sell my home and move to another location. I am torn between paying off the mortgage or paying for new car in cash. Any advice? Thanks so much. Michael

SAVAGE SAYS: Well, I generally tell people to pay off their mortgage before retiring — but your case is a bit different. First, you have a very low rate loan. Second, you are thinking of selling and moving. So why go through the process of? paying down your loan. BUT,? you are giving me a bad alternative. Are you really sure you want to use that same amount of cash (or nearly the same amount) to purchase a car which is guaranteed to depreciate in value?? OK, a cash deal on a car is better than a high-rate loan — but there are very low cost financing deals around right now on cars.

Here’s what I think the real problem is:? You shouldn’t retire yet!? You don’t want to start taking Social Security and have permanently reduced benefits. You still want to buy/own too many things. And there is too much uncertainty about your expenses in the future. So unless you have a very good reason for retiring, try to stick with your job for at least another 4 years!