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Crosenfield,

Thanks for your input and comments.

The 8% is tax deductable. You can get very good tax free bonds at 5 1/2%, with no tax ever.
These bonds would be liquid.
Further, the money in MMs is available for your needs and wants without any hassle. If you get sick
and need big $$$, it would be harder to refinance after you are retired.
You've already qualified for the mortgage, paid your closing costs, etc etc. I'd opt for the liquidity
and leave the mortgage where it is.


I see these same advantages to waiting.

Here's the gist of my quantitative evaluation:

1.
8% mortgage before tax -> 8*(1-.36)= 5.12% after tax; with a 36% marginal rate. This is the after-tax cost in waiting.

2.
5% return on MM -> 5*(1-.31) = 4.05% after tax; with the 31% marginal rate after retirement. This is one part of the after-tax gain by waiting

3.
36% marginal before retirement minus 31% marginal after retirement = 5% gain by waiting just due to the differences in marginal tax rates. This is also a after-tax gain

Comparison:
Costing 5.12% to wait
Gaining 9.05% to wait

Decision: wait

Does this seem sound and logical?

Of course, one item I am leaving out is the State taxes. These are a flat 6% and will not make much of a difference either way.

Persevere!

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