HOUSING WEALTH ALLAYS FEAR OF “SOCIAL INSECURITY”
Having put quite a bit of thought into planning for your retirement (coming up at the end of this calendar year), the one piece of the puzzle that you’re most hesitant about is the timing of claiming your social security benefit. Your situation is a fairly simple one – divorced, debt-free (both house and car paid for), planning to continue living in your home, do some modest travel, and continue acting in community theater. Neither of your adult children needs or expects your financial support, and you do have a “hybrid” life insurance policy that can help fund long term care should that become necessary. From an income standpoint, there will be some modest pension income from a long-ago employment contract, and you’ve worked out a systematic withdrawal plan from the rollover of your current 401K. (You have a substantial HSA account that will help with medical expenses, and, as an avid do-it-yourselfer, you’ve always been able to handle home maintenance.
The one almost maddening decision that faces you is the timing of claiming social security benefits. Since, upon retirement, you’ll be 65, your so-called Normal Retirement Age won’t come for a couple of years. According to the advice you read, it pays to delay claiming taking benefits until age 70, to “maximize lifetime benefits.” In reasonably good health yourself, it’s the health of the Social Security system you’re worried about. You literally just read the following on Realtor.com: “Social Security could reach insolvency by late 2032 or early 2033…Waiting until age 70 to start collecting Social Security locks in the highest monthly payment, but claiming earlier may help protect against possible cuts.”
While you’ve obviously devoted careful thought to various aspects of preparing for your upcoming retirement, you might focus on one piece of the puzzle, your housing wealth, and consider using that to counterbalance your concerns about social security, setting up a reverse mortgage line of credit. You can wait until age 70 to claim Social Security benefits. If the “doomsday” predictions of insolvency prove true (which would no doubt mean benefit cuts, not total elimination of Social Security income), you’ll have a backup income-supplementation plan.
Unlike withdrawals from your investments, reverse mortgage distributions are income-tax free.* Meanwhile, the “unborrowed” portion of your housing wealth will be guaranteed to grow, tax-free,* at the same rate of interest as that being charge on the mortgage loan itself.
You’re hardly along in your concerns. As a piece in Fox Business says, “Americans are rethinking when to retire and claim Social Security as longer lifespans collide with uncertainty about the program’s future.” On the positive side, your housing wealth has the power to allay those fears, allowing you to execute your carefully thought-out retirement plan with confidence.
https://mutualreverse.com/david-garrison
*Please consult a tax advisor.
David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
Equal Housing Lender