I had a feeling it was a hot topic and searched for some threads but obviously didn't search well enough. These threads were great helping shed some light on the topic. It's clearly a very personalized answer depending on a number of factors. Do you know if MMM take a general position on this topic in any of his posts?
MMM paid off his mortgages early, but only after maxing out his IRAs and 401(k) when he was working. If I remember correctly they were saving ~70% of their income pre-retirement.
he even wrote a blog post about the 'dilemma' you face:
http://www.mrmoneymustache.com/2012/02/24/pay-down-the-mortgage-or-invest-more-a-winwin-question/So, regarding the IRAs, does it make more sense to always max those out each year before putting anything in the stock market? Because cant you just have your IRA funds invested in an index fund like MMM's favorite Vanguard one but gain tax advantages on the money by doing it through the IRA instead of through straight stocks? That said, then you're limited on when you can withdraw the IRA funds and keep the tax benefit until age 59.5, right?
OK... several things to clear up here. An IRA is just one "bucket" where you can put your money. You can invest in almost anything you like, from index funds, bonds, individual stocks, even FDIC insured savings accounts. Personally I'd invest it into an index fund. You should really create your own Investor Policy Statement (ISP) that will guide such decisions.
So by putting money into an IRA invested in a low cost index fund like the VTSAX (Total Market Fund) you are investing in the market, but with tax-advantaged money.
Second, you CAN access that money before age 59.5, penalty fee by a number of different ways. Forum member forummm wrote a great sticky on the topic
here. The favorable tax treatment lasts as long as the money is kept in that account (though eventually the rules will force you to start taking distributions after age 70.5 for a tIRA; there is no limit currently on a ROTH).
I have planned to invest 5k or more it depends a quarter into index funds and the rest of my savings(vice emergency) into the mortgage until the mortgage is paid off. It might not be what everyone would say to do but I like the idea. It's not aggressive either way but it suits me.
This is certainly one strategy. I always urge people to make sure they FIRST have an emergency fund and contribute to their tax-advantaged accounts. After that it's personal preference. If you want to split the difference that's fine. However, I'd do some reading about how a mortgage is an inflation hedge (and therefor can be very useful in a period of high interest rates).