[Read: How to Take 401(k) Withdrawals.]
Pay off your house. Paying off your mortgage eliminates one of your biggest monthly bills and allows you to use your savings for other expenses besides housing. The equity in your home could also be tapped for extreme emergencies, via a second mortgage or reverse mortgage. "If you pay off your house, that's a guaranteed return of 3 to 4 percent," says Stephen Curley, a certified financial planner and director at Water Oak Advisors in Winter Park, Fla. "If you go into retirement debt-free and owning your house outright and you are able to take out 4 percent of your portfolio along with Social Security and meet your retirement needs, that is the best-case scenario. And if you can't stand the capital market, you should maybe buy a fixed immediate annuity."