We have a $300,000 mortgage with a 2.75% interest rate. I want to pay it off. My husband says I'm crazy. Who's right?

By Quentin Fottrell

'I don't want to enter retirement owing six figures when we have the cash to clear it'

"Last year, he bought a stock because someone at his gym called it the next Nvidia." (Photo subject is a model.)

Dear Quentin,

I'm 57 and my husband is 59. We've been married 26 years, and our two kids, 24 and 27, support themselves. We bought our house in 2003 for $410,000, and it's now worth about $720,000. We owe $300,000 at 2.75%, with a payment of $2,150 a month.

We both work. I make $135,000 a year and he makes $165,000. We have about $1.5 million in 401(k)s and IRAs, plus $400,000 in savings, Treasury bills and short-term investments. He has a small pension, we'll both get Social Security, and we have no other debt.

We've never carried a credit-card balance, and we pay cash for our cars. Neither of us grew up with money. I remember my parents arguing about it at the kitchen table. I want to use $300,000 of our cash to pay off the mortgage. My husband says that's irrational.

At 2.75% interest, he says, we can earn more by investing, and paying it off would lock up money we might need. He's partly right about the numbers. But I want one part of our finances that can't be lost, and I don't want to enter retirement owing six figures when we have the cash to pay it off.

Related: 'I'm naturally skeptical': I receive 10 calls a day offering me $15,000 loans at 8% interest. Is this a scam?

Solo decision-making

We have about $420,000 in equity. He's a much more aggressive investor than I am. During the pandemic he got into tech stocks and crypto, and we lost about $25,000 on a position that peaked around $90,000. He calls that minor compared with his gains, but I don't.

Last year, he bought a stock because someone at his gym called it the next Nvidia. I prefer index funds. I've started checking our accounts after he trades, and I resent being put in that role. The bigger problem is that he makes decisions without telling me.

Three months ago, he moved $60,000 from our joint savings into a brokerage account because he thought the market would run away from us. I only found out while checking our balance. He said he assumed I'd be fine with it since the money was still ours.

He says I'm trying to control him, but I don't want to control his money. I want him to stop treating our joint money as his own. My compromise suggestion was to pay off the mortgage with $300,000, keep $100,000 as an emergency fund, and continue contributing to our retirement.

He called that an emotional decision. I told him peace of mind is a legitimate financial goal. Now he says he's worried that if we can't agree on something this basic, we won't be able to retire together. Am I being foolish to want to pay off a 2.75% mortgage?

Exhausted Spouse

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

Related: 'People in the U.S. need to wake up': As a mortgage loan officer, I rejected applications from wealthy couples. Here's why.

Agree to overpay your mortgage each month using some of your savings if you really want to get the outstanding balance down upon retiring.

Dear Spouse,

There are no villains in this piece - only two people who want to be right.

I have a hunch that if you weren't on opposing sides when it comes to paying off your mortgage, you would find another hot-button issue to disagree about. It's OK to make dinner reservations at a restaurant of your choice without telling your partner, but buying single stocks is a far riskier move that deserves discussion. So you need to make a rule outside of this argument: You both sign off on big-ticket decisions.

As a couple, you are in a strong position for retirement when the time comes. With your 401(k)s and IRAs worth $1.5 million and your savings, T-bills and bonds worth $400,000, you have $1.9 million in investable assets, not including your home. At a 4% withdrawal rate - one rule of thumb for a 30-year retirement - you would have $76,000 a year, or about $6,300 a month, although you don't say how much of your investments are in traditional accounts and how much in Roth accounts, which will affect how much you pay in income taxes.

After you pay taxes and make your mortgage payments, you'd likely have about $50,000 a year, but that doesn't include your Social Security benefits or other savings. That income would probably last you 35 years or more. But if you don't plan to retire tomorrow, that scenario is only going to get rosier with time (assuming, that is, that the stock market continues on a long-term upward climb).

Your husband moved $60,000 of your joint savings into a brokerage account without telling you. That is a bigger issue than whether or not you pay off a 2.75% mortgage (I'll get to that in a minute). You're married, after all, not roommates with separate checking accounts. Make a rule and set an amount, whether it's $5,000 or $10,000, and solemnly swear that no one moves more than that amount without telling the other. (And that doesn't mean moving $10,000 a week for six weeks.)

Related: My brother-in-law convinced his parents to sign over their home and life savings to buy a $3 million compound. Do I intervene?

Paying off a 2.75% mortgage

I'm OK with you retiring and still having a balance on your 2.75% mortgage, especially when the money you have invested is probably making closer to 7%. It's really a question of return on your investment, and it probably makes sense to keep that money in your brokerage and retirement accounts. A positive return on the market is not guaranteed, of course, but based on historical averages, the long-term trajectory is upward.

A compromise: Agree to overpay your mortgage each month using some of your savings if you really want to get the outstanding balance down upon retiring. But there are two caveats. The first: Paying extra on a mortgage is typically more effective early on in the life of the loan, when the interest portion of the payment is higher. As time goes by, more of your monthly payment goes toward the principal. The second: You may be limited in how much you can overpay (10% in some cases).

If you can afford to pay off the mortgage without leaving yourselves short of an adequate emergency reserve, I wouldn't dismiss that choice completely just because it isn't mathematically optimal on paper. As long as you realize that saving a guaranteed 2.75% isn't going to beat the S&P 500 SPX most years (there's no accounting for market risk), it's true that eliminating a $2,150 monthly payment in retirement would give you more breathing room.

It's easy to paint your wish to pay off the mortgage as an emotional one, because you have been open about your anxieties, hopes and concerns. But your husband's decision to buy a stock that a friend recommended as the next Nvidia (NVDA) was also an emotional decision. It was driven by excitement, urgency, impulsiveness and hunger for a more aggressive return on his investment. (Nvidia has risen more than 1,000% over the last five years.)

There is a communication breakdown when one partner makes a unilateral financial decision without consulting the other, along with a locking of horns over the mortgage. What you really need here is a referee or a financial planner who can provide impartial advice so you can remove emotion and "wanting to be right" or "not wanting to be wrong" (which are slightly different things) from your differences of opinion.

Don't miss: My wife says we can't afford to retire. I vetoed her $8,000 trip to Italy. We're in our 60s and have $4 million. Do I keep working?

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

More columns from Quentin Fottrell:

My wife never went back to work after raising our kids. Do I have to share my retirement savings 50/50?

'I don't want to die on the sales floor': I'm 67 and earn $19.50 an hour at a big-box store. When can I finally retire?

'I'd rather be on a beach in Bali': My husband resents my $8 million net worth. Should I pay for his retirement?

'My husband suffered a massive stroke at 53': I'm 64 and will rent for the rest of my life - but I'm still hopeful

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-Quentin Fottrell

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10-21-26 1615ET