Hello everyone,
My dad is retired and my mom has decided that she plans to retire in 18 months. They owe $200K on their mortgage @ 4.5% and their principal and interest payments total $12,000 per year. My dad is lucky enough to have a pension and my mom has about 650K saved in her 401K. She will be depending on withdrawing from her 401K @ 3.8% per year in retirement to pay living expenses.
I've been thinking about whether it makes sense to pay off the mortgage with part of the 401K which would reduce their overall household expenses, however, it would limit the future amount of her withdraws due to the decreased size of her 401K.
What are your thoughts? I would appreciate your input as I help them through this decision process. Please feel free to ask any questions.