I agree with everyone so far - ramp up your savings, lower your spending, and do extra payments on the mortgage debt. Please don't take money out of your IRA to pay your mortgage off. At your tax rate, that's really robbing Peter to pay Paul. You have a good start on your investment account. Think of it as you've got half and your spouse has half. You mention your pension, what does your spouse have? We don't need to know, you just need to think about this. Half a million $$ on a 4% draw-down - which is generous, most advisors nowadays advise 3% - is $20K per spouse, before taxes. With tax hikes almost certain to come in the future, what are you estimating as your future tax rate? Have you looked into Roth conversions? Instead of throwing all your bonuses and extra funds into the mortgage, you might get a better return by splitting the money and using some of it to pay the taxes on the conversions each year before retirement. Also, your spouse needs to roll over those 401k's into one IRA. Trust me, if anything happens to her, it's a paperwork headache for the survivor to get that done. It takes time and energy, and when somebody's grieving, it's the last thing one wants to do. But it's a necessity if you don't want the IRS to get involved. I'm going to offer some questions for you to think about because you are at the perfect point to start doing serious retirement planning. The reason you need to figure out if your assumptions are correct for future savings and the best return on spending, is that if those assumptions are wrong or plain bad luck intervenes, you still have time to adjust and make corrections. Have you and your wife sat down to talk specifically about what both of you envision retirement to be? What's your 'bucket list'? What's hers? What do you want to do in retirement? How much will it cost to do those things? For example: I retired 2 yrs before DH did. Our expenses did NOT go down and our income stayed static because we were contributing as much as we could to DH's 401k. But when he did retire, our expenses jumped overall. We have retirement health benefits, so there was no extra cost there. But we wanted to travel locally, and even that required several hundred $$ of clothing and travel accessories. We were able to donate an entire carload of work clothes to charity, which was great for deserving poor folks, but no one was going to pay us for them. That first year we spent almost four months out of twelve traveling through Northern CA and the PNW, mostly car trips but a few airline trips, at a cost of almost $25K post-tax. We do what I consider to be mid-level travel: not budget or RV travel, but not luxury high-end places either. If I were in your situation I would find a certified or registered financial advisor to run some numbers. What will happen if one of you dies? What happens if one of you gets disabled and needs care? What happens to the surviving spouse if death or disability happens BEFORE retirement? Are you adequately insured to mitigate the bigger risks in your life (and it takes some analysis to figure out what those risks are, that might prevent you from achieving your goals)? Do you have enough $$ coming in for a sufficient 'cushion', especially if you intend to maintain two houses in retirement? Do you know what medical insurance will cost for a pre-Medicare senior? What if a serious medical condition happens and one spouse becomes uninsurable, or at least rateable? Can the budget afford the insurance and any needed medications or extra co-pays? How do you plan to handle long term care costs for one of you? For both of you? These kinds of questions are just as important, perhaps even more so, than the simple question of "should I pay off my mortgage with IRA money." HTH, and good luck going forward.

Fascinating discussion, and timely for me, as I am trying to decide whether to retire. My wonderful boss left last month for a new job and they transferred in someone who is a total idiot. We saw our financial advisor on Monday and he agrees that we can afford it. I am 61 and hubby is 49; he has eleven years before he can retire from his job (not Federal). I have 29 years in the Fed government, so would get a defined pension and keep my health benefits. We have been saving at a good clip for the past 15 years (married for 17 years) but took a hit in the dot.com bust and again last year. Since the market went haywire, I've focused on paying off the mortgage. Have $18K left to pay. Right now, our investments are averaging 4%, so the mortgage paydown seemed like the better option. Expect to have it paid off by next year at the latest. (BTW, we don't include home equity in our "assets" because we would have to sell to obtain the value, and we love our location.) My problem may be off-topic. I have no idea what I would do if I retired. We don't have kids and our parents are healthy. I have hobbies, but can't imagine staying home all day. Most of my friends are still working. You are lucky that your DH may be retiring soon.

Kittenn - I am the OP and I haven't been back to this thread for awhile. I hope that you didn't really intend for your post to be as lacking in compassion as it sounded. You certainly seem to have every reason to be as satisfied with your life as you say you are. All those activities indicate that your health is pretty good. You have a partner who can help you and share with you. You live in a lovely rural area which is probably crime-free. All reasons to count one's blessings. My friend is 67 and in poor health, with advanced diabetes and its attendant neuropathies, severe arthritis, and uncorrectable vision problems. She cares for her sister. Her sister suffers from a rare and complex form of fibromyalgia which has turned her, over the past 30 years, into a near bed-ridden invalid. Her pain is so severe and intractable that she's now talking about going overseas for legal euthanization. Medicaid does not begin to cover all her bills, which are astronomical. SSI does not allow her to use anything but Medicaid. She recently had experimental surgeries by docs at one of the best medical facilities on the East Coast. Those surgeries failed and, in fact, did nerve damage and made her pain worse. She can barely use her upper body - can't use a computer, can't cook, can't fold her own laundry, make a bed, nor even hold a book or magazine. Her only pleasures are watching TV and talking, when she isn't crying, to my friend. These are two women in dire straits. Their money is eaten up by medical bills, house taxes, payment on the home equity loan, and my friend's monthly costs for carrying insurance. They cannot do their own house work or repairs. Not only do they not DIY, they don't have the physical ability that most of us take for granted. When I posted it was to ask for financial advice, not to have judgement passed on how to manage on $2000 or so a month in a huge East Coast city, in light of horrible medical problems. My friend's mistake was not to pay attention to the realities of investing when she was much younger, and I was looking for a solution. And BTW. When my friend dies, her sister will be left with one of two things. Either the SSI, which alone will in no way cover all her needs, but nevertheless does not permit her to inherit a penny. Or she can abandon SSI and inherit what my friend and her useless brother have managed to save. She will need at the very least assisted living. $300,000, annuitized, will not generate enough for that, given a normal life span, let alone the possible nursing home requirements down the road. Or she can go into a Medicaid facility. I've seen those and frankly, I'd rather be dead. Thus her talk of euthanasia. I am grateful to the posters who gave me useful information about TIAA CREF and other financial possibilities. Sometimes all you can do in situations like this is provide suggestions, and pray. The reason I came here rather than to the Caregivers Forum is because money is the main issue with this problem.

I'm not retired yet, but I'm getting close. I anticipate retiring at age 55. We've planned carefully, and we expect things to work out like this: Early retirement years: With our house and cars paid for, my pension will cover the bare-bones of our month-to-month needs. I will have my basic medical paid, and I will be able to cover him (at cost). We will be eleven years too young for Social Security. We intend to work either part-time or seasonally rather than dip into our savings too early. For example, if I substitute teach 8 days a month, I'll have as much money as I make now. We're also interested in "fun work" such as working at the seasonal Renaissance Faire. We have plans for travel and other such things in these years. We are not against using our savings at this point, but we want to do it sparingly /want to see that money continue to grow for later years, when we may need it more for medical issues, and we may see inflation eat into our spending power. Middle retirement years: 67 is full retirement age for both of us, and we're operating on the assumption that we'll begin collecting Social Security at 67. With two Social Security checks, we stop any part-time work in which we've been involved, and we will have more money than we are spending now ... and we won't have withdrawn much from our retirement savings. Later retirement years: Looking at our ages and health, this probably means just me. I'm assuming his Social Security will be gone, and we are assuming that inflation will hurt the value of my pension ... so it may not be enough to cover my basic needs at this point, especially because I may be paying for house cleaning, etc. -- things that I won't need to pay for in early retirement. However, at this point it'll be fine for me to dip into our savings. We have calculated the above general thoughts using real numbers, and we feel confident about financial security in our retirement years. Our biggest concern, of course, is medical needs. Regardless of what was taught, any teacher should use correct spelling, punctuation, and sentence structure. I do agree that anyone who teaches should be able to write well; however -- in my experience -- it's the elementary teachers who come across worst in terms of the written word. All retirement programs that cover governmental employees (at any level of government) are funded by taxpayers. Did you mean something else? False, but not entirely false. I'm a state employee. When I retire, I will have contributed 8-10% of my salary to the state pension fund for 30 years. That money has been invested and has grown. The taxpayers won't be funding my retirement; rather, the state will be returning my own investment to me. HOWEVER, a pension is a defined benefit program, which means I cannot outlive my investment. If I retire at 55 and live only 5 years, the state wins ... they get to keep a bunch of my money. and I'd die unhappy knowing that I couldn't leave that money to my kids. On the other hand, if I live to be 105, my money will run out, and -- yes -- the taxpayers will kick in for my later years. Actuaries work on these numbers, and they predict how long the average employee will live -- and that's how they decide how much to withdraw from our paychecks. On average, people will live just about long enough to "make back" their own contributions plus interest earned. I'm fine on retirement funds and withdrawing 3.8% per year. I'll take SS at age 62 since there's no reason not to and will leave me more disposable income. Well, there is one reason not to take SS at age 62: For every year you take your benefits early (early meaning prior to your full retirement age, which is probably 67), you sacrifice 6% of your benefit. To say it differently, if you could collect $1500 at full retirement age ... and instead you take it five years early (at age 62), your monthly benefit would only be $1050 ... that's a great deal of income to give up for the rest of your life. Obviously, I made several assumptions in that equation, but consider exactly how much that 6% per year would be for you personally.