Q.I owe $107,000 on my mortgage and have 25 years to go before it's paid off. I'm 56 and want to retire when I'm 68. Currently, I take $1,000 out of my $150,000 savings each month for my mortgage payment. Should I pay off the mortgage now or continue doing what I've been doing?

A.Here's a simple formula to decide whether it's smarter to send extra money to your lender or save it for retirement.

Multiply your mortgage rate by 1 minus your income tax rate. Compare that return to what you think you would earn on the savings or investment from which you are withdrawing the money. Choose the higher one.

Example: If your mortgage interest rate is 6% and your tax rate is 25%, the math is 6 times the difference of 1 minus 0.25 (or 6 times 0.75). The result is 4.5%. That's your real mortgage rate when you consider the mortgage tax deduction.

We assume that you're not taking this money out of a tax-protected account. We'd advise against that.

You'd likely be better prepared for retirement if you moved $6,000 of your savings into an IRA. Since you are over 50, you can add $6,000 a year -- the new maximum contribution for those 50 and older. That's probably the best way to grow your retirement nest egg.

For more advice on saving for retirement, take a look at our 6 simple rules for a successful IRA.