I have a 2004 Volvo XC70 in the shop for regular maintenance (~120K miles) which includes replacing the timing belt. They are recommending that we replace the water pump now while they have the timing belt off to save labor in the inevitable event that the water pump goes bad soon. Does this make sense?
Yes. If the water pump goes out later, you face essentially the same labor cost as you do now to replace timing belt only. Paying for the part only now, at 120K miles, makes sense.
I would second that. I did the same on my car a few months ago.
By the way: You’re overdue for that timing belt change. The reason for changing the belt is because it will eventually break. If it breaks, whatever they are planning to charge you now will look like Monopoly money compared to what it will cost you to fix the engine.
Yes, just make sure they give you the discount (time saved) for having the work done at the same time. I had to check my otherwise-trusted mechanic, caught an error.