At age 56, you’ve just received the very unwelcome news that you, along with several co-workers in your department, are being “downsized” (aka let go) just weeks from now (with pay continuing for six months). While you began immediately to put out job feelers, the horizon does not appear rosy in terms of coming anywhere near to replacing that level of income. In terms of insurance, you qualify for COBRA, but that appears to be a very expensive option; you are looking for an Affordable plan. Your husband, although eight years your senior, is still employed, but the one income will hardly support your needs, and he is reluctant to borrow against his own 401K if that can be avoided. The HR department counselor suggested looking into a Rule of 55 withdrawal plan on your 401K (which your company makes available), explaining that, even should you fail to find a suitable position quickly, those tax free withdrawals would help tide you over. Meanwhile, the two of you have discussed taking out a home equity line of credit on your home, which has appreciated nicely in recent years.
Alas, your story is all too typical nowadays, but it appears you’re investigating different options moving forward. As an alternative to a home equity loan or the Rule of 55 withdrawal from 401K, you might consider using your housing wealth in the form of a reverse mortgage line of credit. While you are under the age to qualify as the borrower, your husband would be the primary borrower, with you as the eligible non-borrowing spouse. Unlike the case with a home equity line of credit, there will be no need to make regular installment payments. Once you’ve gone back to work, you can stop withdrawals (and perhaps even start voluntary repayments). In the meanwhile, both your 401K funds – and your husband’s – can continue growing on a tax-deferred basis.
In terms of a post-downsizing transition plan, tapping your housing wealth may prove the most flexible plan for adjusting to the new realities without the need to either impact your retirement savings or to take on new monthly payments.
https://mutualreverse.com/david-garrison
Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).
Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. 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