If you are not comfortable investing then I think that paying off your mortgage is a way to get a 4% return. I was still having difficulties understanding your spreadsheet, but a few things stood out.
1) You are using a 4% investment return. The stock market has averaged 8%+ over longer periods of time.
2) After 10 years you are increasing your investment amounts, yet you are not accounting for the principal paydown on the mortgage. That would most likely drop the benefit significantly. You should do side by side asset/liability based calc.
3). You are not doing any harvesting of gains or losses to minimize income to eliminate any EIC discounts. You should be able to minimize taxable income to claim the EIC in most years.
4) You are not taking any tax benefits for having a mortgage, which may be warranted based on charitable giving, taxes and mortgage interest.
5) You have not placed any value of having liquidity to purchase assets at a discount or the flexibility to get yourself out of trouble with liquid investments.
You are also banking on doing this to structure your income to get the EIC in 10 years. Your income and the rules around the EIC may change significantly in 10 years. As you may have heard a certain portion of the population do not like the idea of giving the less fortunate money. Tax laws will most likely be revamped in the next decade. In any case if you felt comfortable to invest you could liquidate your investments to pay off our mortgage and still get the EIC.
The government was trying to stimulate the economy. They purposely created an environment where interest rates were depressed. We have never seen rates this low. If you can't beat a 3.5-4.5% interest rate over the next 20+ years, then your Safe Withdrawal Rate would be around 1% or your actuarial life as all the models have the markets earning in excess of 4%, with the average being 8%+
It's not that I am uncomfortable investing, I am still investing a little over 10% of my gross income during this entire time, what I am unsure of is that the time frame is less than 10 years. To my knowledge the S&P 500 hasn't lost money in a 10 year time frame, but it has in less than 10 years.
1.) The difference is 4% investment return (the amount earning more than the mortgage interest)
2.) After 10 years I am still accounting for the principal and interest pay down, which is why that money is shown with the the difference of 4% in gains (8% over the 4% return on the mortgage).
3.) If you look at how EIC works, it takes the higher of your AGI or earned income, harvesting losses really won't have any effect unless if I can get my earned income lower (which is possible by putting more in my 401k, and I can put enough in my 401k once I have less debt obligations).
4.) I might get 2-3 years of this benefit, and it is very minimal. As the standard deduction rises this would go away on its own very shortly without making any additional payments. I suspect I will be between $600-1000 this year over the standard, so without paying extra towards the mortgage, as interest decreases and the standard increases, I am looking at maybe 2 years to claim this deduction - then the following years I have to claim the refunds of state and local as income. So this could be a benefit of $135 the first year then maybe $45 the next. If it makes you feel better I can add that into the calculation, but I don't think $180 is going to drastically change the outcome.
5.) Liquidity is nice... but a 401(K) isn't exactly liquid either. Besides, dropping expenses decreases the need for liquidity. What assets do you see as a discount with the current P/E ratios? It's not like I have $0 going into the market, so I am still dollar cost averaging. If the market tanks, then I can look into investing that $4,800 in the market and then paying off once it is crosses the paths, but at market highs I am going for the guaranteed return.
If my income changes significantly I will adjust then, and consider it a win. But I need to plan based on what is known. If tax rules change it could change how everything works, 401k's, ROTH's, etc. But one thing that is actually being pushed for is an expansion of the EIC by economists, and it was even in a republican's tax change proposal! So it may change, but everything could change with a large tax reform, so why would the risk be greater looking to claim the EIC then putting the money in a tax advantaged account? I guess I have another advantage since I work for a government and it gives me the opportunity to invest in a 403(b) as well as a 401(K). This would allow me to defer additional an income increase of up to $17,500 (based on current contribution limits), allowing for more flexibility to claim to EIC if my income does increase.