Q. I’m retiring soon at 60 years of age and 30 years. I have TSP savings of about $600,000 in the L2020. My monthly retirement annuity before taxes is estimated at $3,971, which includes $1,414 in the Social Security supplement. My mortgage is $260,000 and I am paying $1,889 a month with a balloon payment due in 2022 for $244,380. The interest rate is 4.99 percent (as is the APR) with total interest percentage (TIP) of 32.9 percent. I need advice on whether to withdraw $260,000 from my TSP and pay off the mortgage or leave it. I’ll need to make a monthly TSP withdrawal of about $2,000/month if I still have the mortgage. Plus, I’m worried about U.S. economic collapse! What is your advice?
A. Unless you are confident in your ability to manage invested money, I think you should favor paying off the mortgage. While the return on this investment might seem relatively low, it is a sure thing and it relieves you of the responsibility and risk inherent in managing the $244,000 in your TSP account.