<#-- Rebranding: Header Logo--> <#-- Rebranding: Footer Logo-->

Should I use my 401(k) to pay off my mortgage after I retire if I am still raising three children?

Should I use my 401(k) to pay off my mortgage after I retire at age 66? I plan on continuing to work at my second job, collect Social Security, and my pension. My mortgage is my biggest expense and I am less concerned about medical coverage. I am still raising three children and feel it would be a mental relief when addressing my monthly bills if my mortgage was paid off.

Debt, Financial Planning, Retirement, Pensions, Social Security
Answers
Sort By:
Most Helpful
August 2018

Reducing or eliminating your mortgage upon retirement is an excellent goal.  However, you must consider the taxes owed on a large lump sum withdrawal from a 401K.  This is especially true if you have earnings from second job, a taxable pension, and likely taxable social security income.  

How old are your children?  Did the social security administration alert you to family benefits available to children under the age of 18?  If you begin your social security retirement benefits, child dependants under 18 can also recieve 50% of your primary insurance amount.  If there are 3 kids under 18, these benefits can add up!  This could also hopefully defray some of your mortgage costs.  

Another note is we are approaching year end - you may consider withdrawing some 401K monies now and some after the 1st of the year to spread out the taxes.  If you are not retiring until next year, you could institute this strategy then, pay off some, then wait until 2020 to pay off more or the remainder.  

August 2018