I’m 67 years old, single, and retired at 66. I receive $3,100 monthly from a pension after taxes. I also get $2,100 monthly from Social Security after taxes and my Part B Medicare payment. I have about $100,000 in shared funds/savings accounts and $500,000 in my 401(k) account.
Living comfortably on the $5,200 I receive monthly from my pension and Social Security is possible, but there’s very little left over for anything “enjoyable.” I have two adult kids, one grandchild, and one on the way, so extra money tends to go their way.
Here’s my question. I own a home worth around $275,000 and have a remaining mortgage balance of $57,000. I have a seven-year mortgage at 2.65% and 5 years remaining. Should I pay off my mortgage with my savings, or continue making monthly payments until I need to move to a home without stairs?
Your advice is appreciated.
Read More: My husband and I are in our 50s with $300,000 in a 401(k) and $700,000 in a pension. Will we have enough to ‘live an easy life’ in retirement?
Dear reader,
This is a timeless question, and it’s great that you asked. Many other seniors have similar concerns about their financial situations. The answer depends on your individual circumstances and your feelings about debt. If you can comfortably handle the mortgage payments based on your monthly income and savings, it may be okay to keep it. Not everyone is comfortable carrying debt in retirement, even if it’s manageable.
At the end of the day, you don’t want to deplete your pension to pay off a mortgage if you can afford it.
Another perspective to consider is comparing your fixed interest rate on the mortgage to potential returns on your portfolio. Depending on how your 401(k) is invested, it might have a higher return rate than your mortgage. Some retirees may need to reevaluate their investment strategy to balance risk and potential returns.
