Should You Save for Retirement or Pay Off Your Mortgage?

If you are in a high tax bracket, max out your 401(k), earmarking some of those dollars for a future payoff.

Q:My wife and I are 56 years old and we plan on retiring at age 64. We have good incomes, our kids are now self-supporting, and we would like to hit retirement (in 8 years) with our home paid off. In order to make this happen, we decided to reduce our 401(k) deposits to 6% (from the max), and to take that extra money and apply it to our mortgage payment. Was this wise? -- James

A: Transitioning into retirement with a home paid off is often a good goal. After all, if your retirement expenses are less because there are no more mortgage payments, then the income you’ll need during retirement will be less, as well. Simple, right?

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Scott Hanson, CFP
Financial Advisor and Co-Founder, Hanson McClain Advisors

Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.