Pay down mortgage
Hi Terry,
I recently retired and we have a mortgage of $170,000. My wife is still working and makes an annual income of $75,000. My monthly pension distribution is the same net amount as if I was still working. I’m 62 years old. I have over 1.5 million in my pension fund. We were discussing the possibility of paying down half of our mortgage next year using my pension money. Is this something you would recommend or discourage? The goal is to eliminate the mortgage payment sooner. I have about 9 1/2 years left on the existing mortgage. Thanks
Terry Says
A lot depends on the interest rate on your mortgage. If it is higher than 3.5% I would have recommended refinancing BEFORE you retired to get a low rate on perhaps a 10 year mortgage. Now it might be difficult to refi and lower your rate. In that case, I could understand trying to reduce the balance.
But, typically you can’t withdraw from a true defined benefit plan. Check out your options on that front. And even if you can withdraw, that must be offset by the taxes you will pay on the withdrawal. And that depends a lot on your tax bracket — and any laws congress might pass before the end of the year to raise tax brackets!
