Both my wife and I will be retiring this year. We have approximately $150,000 in savings and are debating whether to use it to pay off the balance of our mortgage, which is approximately $135,000. This would save us nearly $680 per month in principle. - Jack
This is a great question, but you didn’t include enough information for us to give you a complete answer. The two basic pieces of information that we don’t have are your ages and where your savings are invested. Of course, it would also be helpful to know what kind of income and expense structure you’ll have in retirement. If you submit another question with these details, we’ll respond directly to you.
In the meantime, here are a couple general thoughts on the subject. First, if your savings are in retirement plans or IRAs, you’d take a huge tax hit if you decided to use that money to pay off your mortgage. And after taxes, you wouldn’t have enough to pay off the entire balance.
If your fixed income from other sources (i.e., military retirement, pensions, Social Security, etc.) covers your basic expenses, including your mortgage, we’d be inclined to keep your savings intact. There’s something to be said for the flexibility that having access to $150,000 provides.