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My husband and I are at the point in our lives where we have worked full time for 25 years and no longer enjoy our day jobs. Having a mortgage ties us to keeping these jobs. I've done the math and because we are paying our mortgage off at such a fast pace we come out about the same vs investing the money. Plus in 5 yrs when mortgage is gone we will have a paid for house, about $600,000 in investments, a nice sized emergency fund and the freedom to work part time!

Admittedly you have all the facts here, but I'm confused how "the math" comes out to favor paying off the mortgage, and how it will come out about the same as investing the money. This certainly would be true if your mortgage is >>4% - and if that's the case I'd suggest looking into refinancing.

Having a mortgage doesn't hold people to their jobs per-se. Having insufficient assets to pay for monthly expendatures does. I believe that's what **Scandium** was trying to say. If you pay the minimum to your mortgage each month and invest the rest, you will (historically) earn 6-7% after inflation over long time-scales. Yes, your monthly payments in ER will be higher than if you had no mortgage, but *you will have additional investments that can more than compensate for the increase. *

If you are planning on using the 4% SWR then the math gets even simpler. By choosing a 4% SWR you are effectively saying that you are comfortable with being able to withdraw 4% per year regardless of the short-term market conditions, and that the chances of your money ever running out are small. Ergo, if your mortgage is at or less than 4% you'd be better having that money invested vs paying off your mortgage. The return that you get on your money (by your own acceptance of the 4%) will exceed the interest you pay on your mortgage over time, even with recessions, corrections, etc.

Also, even if you just pay your monthly minimum your mortgage will dissapear after x years. Presumably, the principle of anything you've invested will still remain, because you've been relying on just the interest of your investments to counteract the interest paid on your mortgage. From that point forward you have a bigger stach and no mortgage payment.

It seems I have hijacked the OP's post here and that was not my intention. However, as we are on the same subject and you are asking, I thought I'd provide a little more info on how I am calculating and seeing things.

First off we are ages 42 and 44, hoping to retire in 10 years. We currently have an investment networth of about $400,000 and do contribute about $20,000 a year to this, some of which is company matched. We will be continuing this going forward. We also have about $300,000 in home equity. We live in Canada where mortgages differ a little from the US and seem to be a lot bigger! Our mortgage stands today at almost $400,000 exactly - we have 4 years left in a 5 year term mortgage at 3.26%. Right now we are locked into weekly payments of $900 a week which essentially puts us at a 10 year amortization if we don't put any extra money down on the mortgage.

We currently have an additional $2400 a month to work with. If we take this $2400, and combine it with our typical annual bonuses we will have our mortgage paid off in full somewhere between 4 - 5 years. Hoping to be closer to the 4 year mark so we don't have to renew our mortgage term. According to my mortgage calculator we will be paying about $33,000 in interest during this period.

Compare this scenario to not putting any additional payments on the mortgage and letting it run its 10 year course, we will then be paying almost $68,000 in interest. But say we took the $2400 a month extra during that time and invested it hoping for a 6% return. According to my trusty compound interest calculator we will have made $288,000 in contributions and gained $106,000 in interest bringing us to around $394,000 at the end of 10 years. Not too shabby indeed!

But say our mortgage is paid off in 5 years and we now have an additional 75,000 a year available. If we take this $75,000 (based on monthly average of $6250 investing monthly) at 5 years at 6% I calculate us at $375,000 in contributions with $64,000 in interest and a total value at $439,000. This also doesn't include that much of this money would be invested into RRSP's which would also provide a large tax refund each year, not to mention the mortgage interest savings.

To me it seems to come out very comparable if not better to pay off the mortgage first. And combined with the peace of mind and future options it will give us this seems like the way to go.

If I am mistaken in my calcs I'd love to hear some feedback as I do admit its very quick, back of the napkin type calcs.