No, no, no! It’s not just a question of paying off a low-rate mortgage. There are other significant implications of your wife’s early retirement. Start out with: what is she going to do for health insurance?? That should be a key consideration. If she works till age 65 she will be eligible for Medicare. But there is a three year gap if she retires at 62.
Second, she should NOT take Social Security at age 62! That is the worst mistake a retiree can make! It not only permanently lowers your benefits, but lowers the base for future cost of living increases. It’s as if you gave up an 8 percent per year return on your money. DONT DO THAT — She must wait until her full retirement age!
Finally, you’re going to NEED the money in your “old” 40l(k) down the road. If you don’t like where it is, thendo a rollover to Fidelity or Vanguard. The longer the money grows tax-deferred, the better off you’ll be. Try not to take withdrawals till age 72 — the new age for RMDs. When you withdraw, you’ll be subject to ordinary income taxes.
How silly to give up this very low-rate mortgage to raid the cash in your 40l(k) and pay immediate taxes!
Finally, have you considered the costs of healthcare even WITH Medicare over your retirement years. The annual Fidelity survey says a married couple, retiring now at age 65, can expect to spend $285,000 on healthcare costs, including premiums, in retirement. You’re going to need every penny you can get.
My suggestion is to work with a Certified Financial Planner who is a FIDUCIARY — promising to put your interests first, and charge fees, but no commissions Find one at Wealthramp.com.