Daily Question is excerpted from the JustAnswer archives and features information provided from an expert on JustAnswer:
Q: I want to know if I should be paying down my mortgage or contributing extra money into my retirement fund. I want to retire in 10-15 years with a police pension.
What will make you happier in 15 years?
A: In general, as long as you are still working, I would not pay off the mortgage. It provides a little tax benefit, and the best scenario you can hope for is a 3-5% return by not having to pay interest. You have little upside potential, but almost no downside.
Investing in your retirement plan keeps compounding and growing tax-free. You have much more upside potential overall with only a small downside potential, considering your time frame. Downside potential is usually what scares people. If you gave a time horizon of 6 months, I might have a different answer. But you are talking 10+ years, and upside far exceeds downside.
When you retire and live on a fixed income, then I would pay off the debt.
– Answer from Randall Klein, tax advisor and financial expert on JustAnswer.
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