I had a career as an economist and financial analyst in the commercial banking area. I retired at the age of 70, and then I started my own tax-preparation and representation firm because I enjoy working with people and helping them resolve their challenging tax issues. My annual revenue is approximately $60,000 before taxes. I’m now 77. I have approximately $565,000 in an IRA, $250,000 in a Roth IRA, $435,000 in a brokerage account, and $189,000 in a 4.3% high-yield savings account.

I also have a $310,000 mortgage balance with 10 years remaining on a 15-year, 3% mortgage. The PITI payment plus HOA fees are about $3,750. I receive $4,400 from Social Security and a small retirement payment, which together make a monthly income of $5,000, excluding the interest from my monthly savings account. When I add all the other expenses like medical, food, utilities, gasoline, insurance and the like, my monthly income doesn’t cover them. So, I rely on what my business generates to fill the gaps.

‘It’s getting scary close to retirement’: We’re 70. We have no debt, no stocks and $275K in savings. Are we in trouble?

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The current administration’s policies and uncertainties have taken a big bite out of my nest egg. I keep hearing about holding tight and, frankly, I don’t know how to rationalize this market. I wonder if it makes sense to pull money from the IRA to pay off the mortgage before the market erodes further. That would put an extra $2,800 a month in my pocket. When I refinanced to a 15-year low-rate mortgage, my investments were earning more than the interest on the mortgage. Now, however, that is going in reverse.

What do you think?

Septugenarian Investor

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Pay off your mortgage.

Yes, you have an attractive 3% mortgage rate, but at 77 you should be aiming for a comfortable life with peace of mind, and enjoying the distributions from your investments. That $2,800 per month will do just that. Even if you reinvested the $33,600 you spend annually on your mortgage, you would earn tens of thousands of dollars in returns, assuming a 7% return, over the next five years. You would also eliminate any reason to make additional/higher withdrawals from your other IRA and brokerage account.

I take my hat off to you for keeping your own hat in the ring and continuing to work and earn a relatively modest additional salary because it gives you pleasure, and I hope that affords you the time to take vacations and enjoy your hobbies. Paying off your home also helps you simplify your life and your finances at a time when you should be smelling the roses. The market has been volatile so far this year, but it has regained those losses from the April correction, and a 7% return, a major market correction notwithstanding, seems reasonable over the medium-to-long term.

After paying off your mortgage, you would still be left with $810,000 in combined investments and cash, so you would have a healthy cushion, and your $5,000 monthly income should comfortably see you through the next decade or, hopefully, two. I’m curious about your $5,000-plus monthly expenses: This is also a good time to look at your lifestyle, power of attorney, living will, prioritize your needs and see what expenses you can cut. But cutting that $33,600 in annual mortgage payments should bring you back into the red on a monthly basis.

Your current plan adequately covers you for the corrosive effects of inflation, assuming that averages 3% a year. You, given the size of your assets and monthly income, can afford to live a little and have fun. “Many people struggle to switch off a ‘savings mindset’ and err on the side of caution which can result in them failing to make the most of their money in retirement,” according to Fidelity International. “There is no simple answer to how much you can safely ‘spend’ from your pension savings each year.”

Don’t worry too much about world events ruining your retirement. I’m assuming you are not 100% invested in equities in your 70s. The political and economic landscape is currently unpredictable and some economists have expressed concern that President Donald Trump’s “big, beautiful bill,” which outlined his major tax and spending plans, will add over $3 trillion to the deficit over a decade, and also worry about tariffs slowing down economic growth, lead to higher costs for a variety of goods and services, and cause companies to pull back on hiring.

It’s tough to be a retiree in 2025, but it will be equally, if not more, challenging for those coming after you in the next 10 or 20 years. The “magic number” for retirement surpassed $1 million in 2021, and now stands at around $1.26 million, which is actually down from $1.46 million last year, according to a recent poll from Northwestern Mutual. Inflation surged in the months during the COVID-19 pandemic and people had even more cause to worry about how much they would need to retire. On a hopeful note, you may feel more confident a year from now.

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Previous columns by Quentin Fottrell:

My neighbors need somewhere to stay after a house fire. Do I say yes?

My daughter has $500K in med-school expenses. Can my wife and I afford to pay it off?

‘I enjoy vacations to Europe’: I’m 75 and have $1 million in an IRA. Why do I feel guilty?

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