Plan for Retirement – Stretch Your Dollars
~ By Jim Doyle ~
“I took out a reverse mortgage when I was in my 60s. That allowed me to postpone receiving social security, gave my retirement fund time to grow without being touched, and provided additional income monthly because I didn’t have a mortgage payment!” HR, Woodland Park
This is a common response to a reverse mortgage. It can open doors of opportunity that would not be possible without the money that it makes available to the homeowner.
There are four main ways a reverse mortgage can be used to provide security to a homeowner:
Receive a Lump Sum at Closing
The proceeds of a reverse mortgage are tax-free income that may be used in any way you choose. Some seniors are helped significantly by having their mortgage payment eliminated, and then having a lump sum with which to pay off debt. The sigh of relief is amazing when there is no mortgage payment to worry about, and debts are reduced or eliminated! Other seniors want to do improvements to their homes, and enjoy those upgrades after years of waiting for the right time to complete them.
Grow Retirement with a Growing Line of Credit
A line of credit may be established using a reverse mortgage, and is left to grow at an interest rate that is equal to the current loan rates. At any time, the line of credit may be accessed for incidental cash, in-home care, converted to monthly payments similar to an annuity, or for any other use.
Let Investments Grow and Delay Social Security Benefits
Using this approach, a reverse mortgage is established, and drawn upon every year to allow the retiree’s portfolio, such as a 401(k), more time to grow. Drawing upon social security benefits could also be delayed, increasing the size of the monthly payments later in life.
“Using a reverse mortgage to delay taking social security is a very powerful tool. Determining when to take social security is probably one of the most important decisions a retiree makes because it affects lifetime income. So, if you can use reverse mortgage proceeds to delay taking social security benefits as long as possible, that provides you with greater monthly income.” ~ Barbara Howard, Professor, Gerontology
Protection from Investment Downturns
In this approach, a reverse mortgage is established, and only drawn upon if the retirement portfolio underperforms. This will spare the portfolio any draw when it is down, giving it a better chance to recover, thereby minimizing risk. You can use your reverse mortgage to supplement your monthly income, allowing your investment portfolio time to recover.
“The most important time to have cash available to you is when you need it,” said the late Senator Fred Thompson. “And more people are using a reverse mortgage line of credit for just that, a line of credit that makes cash available for life’s unexpected turns, or just additional security that grows until you choose to use it.”
Contact your Reverse Mortgage Specialist to learn more about providing for your future.
Jim Doyle is the VP of Lending and a Reverse Mortgage Specialist at Silver Leaf Mortgage in Centennial, CO. Direct: 303-875-5994 JimDoyle@SilverLeafMortgages.com | NMLS# 1394377
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