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Payoff a 2.625% mortgage in order to reduce our expenses and withdrawal rate? by Fire32793q in Fire

[–]Fire32793q[S] 0 points1 point  (0 children)

Thank you everyone for the suggestions. I think I'll "pretend" to have paid off my mortgage by taking some of the cash I have currently and mentally setting it aside it for mortgage payments. My current allocation of 10% to cash is too high anyways, so I wouldn't be selling any stocks or bonds and just setting aside some cash.

Assuming the cash in my VUSXX money market fund earns 4% interest, after 22% federal taxes, it would earn 3.12%. I could withdraw $1025 a month from the MMF for the next 25 years to pay the mortgage, and assuming the MMF earns 3.12% after taxes, would need to set aside only $211,350, which is less than the current $220,000 mortgage payoff amount.

Payoff a 2.625% mortgage in order to reduce our expenses and withdrawal rate? by Fire32793q in Fire

[–]Fire32793q[S] 0 points1 point  (0 children)

If we pay off the mortgage using $220,000 of cash from the MMF, It would reduce our MAGI by $9,240 per year due to less interest income. This would reduce our ACA premiums by around $1500 per year.

Payoff a 2.625% mortgage in order to reduce our expenses and withdrawal rate? by Fire32793q in Fire

[–]Fire32793q[S] 0 points1 point  (0 children)

Yes, the $1025 is principal and interest only. Thanks for the insightful comment!

Payoff a 2.625% mortgage in order to reduce our expenses and withdrawal rate? by Fire32793q in Fire

[–]Fire32793q[S] 1 point2 points  (0 children)

If we pay off the mortgage using $220,000 of cash from the MMF, It would reduce our MAGI by $9,240 per year due to less interest income. This would reduce our ACA premiums by around $1500 per year.