Yeah, I was in the same boat as you last October. Sold a rental property and netted $200,000 from the sale. Market was nearing the end of a record year in 2013, and I didn't have the stomach to dump it all in the high flying stock market. Instead I decided to put most, or $140,000, of it towards my primary mortgage. Even though I've got a 2.875% interest rate, I was still paying $550/month in interest - now I pay $170/month in interest.
I put another $25,000 into a brokerage account.
Added $11,000 to our ROTHs in October 2013 and then another $11,000 in January of 2014.
Put $3000 (maximum tax benefit in my state) into the kid's 529 and kept the remaining $10K in a "high yield" savings account earning 1%.
"Problem" is... my savings account has ballooned from $10,000 to $50,000 (sold our boat, tax refund, frugality, you know it just adds up once you espouse mustachianism...). And it's still just sitting there earning that lousy 1%.
Now, I don't pay escrow so I'll need my savings to pay property taxes at the end of this year. Fund the 529 again. And want at least $10K set aside for a "new" used car down the road(both our current vehicles are 10 years old).
But here's what I've decided to do. I'm upping my 403b contributions to $17,400 (up from the piddly $10,800 per year I was contributing). This will reduce my net take home pretty significantly; however, I'll use my savings to make up the difference. My 403b has a 'guaranteed' rate of 4.05%. I figure siphoning the money into the 403b and using my savings to pay expenses is the best I can do right now in this overvalued market.
So bottom line. If you've got 500K, I'd pay most or all of the mortgage off - free and clear. Paying down a low interest rate mortgage is probably not what most people would do, but I'm more risk adverse than most. Make sure you have fully funded your ROTH - don't give a shit how high the market is - you ALWAYS do this. And max out your 401k contributions up to $17,500. Unfortunately, you will probably have to keep close to 20% of your 'stache in a lousy savings account...I don't see any way around it w/your risk tolerance.