Now about to enter your sixth year of retirement (for your wife it will be her third), you’re glad that after toying with the idea of moving to a nearby retirement community, the wisdom of your decision to “stay put” in your “big house” was confirmed after hosting no fewer than six grandkids and their parents for the holidays.
Both of you tend to approach big decisions systematically, considering all aspects and ramifications before moving forward. Had you decided to move, there would have been certain repairs and renovations needed before listing the home; now that you’re staying, you realize, the remodeling can be done in stages over several years, and you will be better able to time large withdrawals out of your portfolio and cash accounts. The home is fully paid for, and you’ve been careful to keep up with all basic maintenance needs.
Your regular income sources include an annuity payment from her former employer, Social Security (you have been collecting for four years, while she began to claim benefits just six months ago), rent from a property she inherited, regular withdrawals from your IRA Rollover account, and a jointly held investment account. You’ve made all investment decisions together, using a simple “pie chart” concept to keep stock, bonds, and cash “in balance”, checking in with your CPA to avoid triggering excess tax.
Your need for infusions of cash will undoubtedly increase as you have the home remodeled to enable “aging in place”. Since that would potentially disturb your asset allocation plan, consider freeing up your “housing wealth” to function as the cash portion of the “pie”. (Unlike selling investments or taking larger taxable withdrawals from your IRA, with a reverse mortgage set up as a line of credit, you can fund the home improvements without triggering any new taxes.) You might even be able to reduce the cash holdings in the joint investment account, all while maintaining your agreed-upon balance of cash, stocks, and bonds. Meanwhile, whatever portion of your equity that has not been tapped will be credited with growth at same rate as the interest being charged on the mortgage balance.
Allow your home equity to keep your assets in balance while preparing your property to serve your needs as both holiday hosts and retirees!
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.orgEqual Housing Lender