The Sawyers own a $500,000 house. To them, it’s a modest house. But to me, it’s expensive.

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Frank and Sharon Sawyer are an entirely made-up 70-year-old retired couple living in Connecticut. Their financial situation looks pretty good, but it’s actually pretty bad. I’m going to see if I can help them with some money magic.

The Sawyers seem well-off. They were able to accumulate $300,000 in regular assets and $300,000 each in 401(k) accounts. All their investments are in safe assets, which they expect will earn 1 percent above inflation. Frank and Sharon also receive $2,500 per month in Social Security retirement benefits.

The Sawyers own a $500,000 house. They have a 20-year $200,000 mortgage, with a monthly payment of $1,200. Property taxes, homeowner’s insurance and maintenance come to an additional $1,250 per month.

When I run the couple through, my company’s free online software, things look fine. (Note: I work for my company for free — to pay my employees more and keep our software prices low.) The Sawyers can spend $59,779 per year, measured in today’s dollars, straight through age 100, if they both make it that long. The $59,779 is their discretionary spending budget. It’s after meeting all their fixed costs on housing, federal personal income and Connecticut state income taxes, and paying their Medicare Part B premiums.

Being able to spend close to $60,000 would be grand, but for two buts. They have a severely disabled child, John, living in an institution on whom they need to spend $2,000 per month. And Frank’s mom’s nursing-home aide is costing $1,000 per month. These costs, plus the $1,500 they shell out each month in their major medical, car insurance and out-of-pocket health-care expenses, leave them with only $1,500 in money for food, travel, entertainment, etc. They are pinching pennies.

They are paying close to 4 percent on their mortgage when they are earning only 3 percent on their investments. The 3 percent is their nominal return. Since they assume a 2 percent future inflation rate, their real (post-inflation) return is, as indicated, just 1 percent.

Why not pay off their loan with some of the $300,000 they hold in regular assets?

The objection that some of you may raise is taxes. Mortgage interest is deductible, and Frank and Sharon itemize their deductions. True, but don’t forget the standard deduction. If Frank and Sharon pay off their mortgage, they’ll be able to take the standard deduction — $12,700 this year — which comes pretty close to their total itemized deductions, including mortgage interest.

I ran them through my program again, but this time with no mortgage or mortgage payments, and $200,000 less in regular assets.Will this help, and, if so, by how much?

Don’t read on until you’ve made a guess. It does help. The couple can now spend $60,780 per year. That’s about $1,000 more per year, constituting a 1.7 percent increase in annual discretionary spending.

My next trick was to have the couple move to Texas, which has no state income tax. This didn’t help because, to my surprise, my calculator showed they aren’t paying state income tax in Connecticut. Their income is too low.

My third trick is having the couple downsize their $500,000 four-bedroom home to a one-bedroom condo, costing $200,000. I assumed that their property taxes and homeowner’s insurance would drop proportionately. But I kept their maintenance costs unchanged, in light of their new condo fee.

How much does this raise the couple’s living standard? Make your guess, and, again, no looking!

The couple can now spend $88,114, again measured in today’s dollars, per year until the end. That’s a whopping 47.4 percent higher living standard — $2,361 more per month in discretionary spending — than they have now.

One thing that worries Frank and Sharon is their dying with no provision for John. But if they downsize and set aside $100,000 in an investment account for him, their discretionary spending only drops to $84,850, which is 41.9 percent higher than where it started.

I can apply more money magic, involving annuitizing their retirement accounts, to produce an even higher living standard for the Sawyers, while protecting John. By downsizing, they can worry a lot less about money, i.e., they can become house-rich!