2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

In this, your fifth year of “semi-retirement” following 40+ year careers in the private education system, the two of you have decided to spend all winter months in sunny…to be decided (probably the Florida Panhandle where several friends live). Because most of the younger members of your extended family are located here in Hoosierland, you plan to continue using your Indiana house as home base (hopefully for the rest of your lives).

This winter, as has been true for the past several years, you’ll be staying in a rented condo, but going forward, you realize it makes more sense to own a modest winter residence. To help finance the purchase, you could increase the part-time consulting work that helps augment your retirement income, since that work can be done from anywhere. Still, an outright property purchase would force you to dig into your retirement assets, something you are reluctant to do.

A reverse mortgage might help speed your path towards acquiring a second home in that sunny TBD place. A reverse mortgage refinance can help homeowners purchase new homes using the equity in their “home base” property. Assuming you’ve built sufficient equity in your Indiana home to finance the purchase of the winter home, there might be no need dig into your retirement assets; no mortgage payments would be mandated.

You would, of course, continue to be responsible for property taxes, homeowners insurance, and home maintenance costs on your Indiana residence. Meanwhile, your consulting income could go towards financing the maintenance costs and taxes on the second property. Important to realize is that, under a reverse mortgage, you will need to occupy your Indiana property more than six months out of each year.

To be determined…will a reverse mortgage help you make “snow-birding”your new retirement reality?

https://mutualreverse.com/david-garrison/

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

You’ve both been employed at the same company (in different departments) for the past nineteen years. Events of the past year and a half have gotten you thinking about retiring sooner than originally planned, possibly at the end of first quarter 2022. One big concern is health insurance, because you won’t turn 65 until December 2022; your wife not until February of the following year. Because you’re not yet prepared to let the company know your plans, you’ve avoided talking to HR about options, instead reading up on your own about COBRA.

Relevant information you’ve gathered: a) Although you plan to wait until you each reach Normal Retirement Age to apply for Social Security, you will each be eligible to collect Medicare beginning at age 65. b) You plan to extend the coverage you have through your employer by enrolling in COBRA. c) You understand that you’ll need to pay not only the premium amounts that are being deducted from your paychecks, but the employer share as well and possibly a markup by the insurance company. (You realize you could enroll in a Marketplace plan, but believe the employer plan is better if you can afford the cost.) Meanwhile, your Long-Term Care insurance company has just notified you of an increase in premiums, beginning this November.

Post retirement, each of you plans to supplement your income with consulting gigs done through a friend, himself a retiree in your field. A regular draw out of your investment and retirement accounts, combined with income from this free lance work should be sufficient to maintain your lifestyle. Your home mortgage should be paid off by the end of 2022, which will make things easier on the budget. The concern is this “interim period” between full time income – and full Social Security eligibility.

Consider using a reverse mortgage to make your transition into an earlier-than-planned retirement less of a financial strain, tapping your housing wealth to bridge the income “gap” as your regular paychecks stop coming. With a Home Equity Conversion Mortgage, you can draw cash to pay these interim costs, all while relieved of the need to make mortgage payments or draw down your investment accounts in the early years of retirement.

A reverse mortgage can bridge the COBRA-to-Medicare Gap.

*Not intended as financial planning advice. Please consult a financial analyst.

https://mutualreverse.com/david-garrison/

An alternative approach to consider involves “swapping” your forward mortgage for a reverse mortgage, then continuing to make the same payment you had been making on the existing mortgage. In approximately the same time as would have been true on your existing mortgage (minus the accelerated payment plan), you will have the mortgage balance paid off.

The difference? With a reverse, every payment you make will go into growing a line of credit capable of producing tax free withdrawals when needed in future years (without you ever needing to re-establish credit or qualify for a new loan).

Gearing up for retirement by “paying ahead” is a noble resolution, but, over your retirement years, there might be greater potential for financial flexibility if you pay ahead in reverse!

*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.

https://mutualreverse.com/david-garrison/

There are actually several reasons you might consider refinancing your reverse mortgage, with perhaps the most important being that your husband is now over age 62. As a co-borrower, should you either need to move out of the home into a care facility (or die before he does), your husband would be able to access the line of credit on the reverse mortgage. (While non-borrowing spouses are guaranteed the right to remain in the home, they have no access to the line of credit.)

The fact that both of you are now older is itself a factor in favor of a refinance, increasing the available funds available for withdrawal (either as a monthly payment or as a line of credit.

In the same manner as your neighbors, who are motivated to refinance their homes by the two factors of interest rates having fallen and home prices having increased, you can consider those factors in deciding to refinance your reverse mortgage.

Three years have passed. You’re older. The value of your home has probably increased significantly. Interest rates are lower. All these points indicate in favor of refinancing.

With all that, the most powerful reason for a reverse refinance might be the step up in spousal benefits.

https://mutualreverse.com/david-garrison/

In the course of analyzing your separate and jointly owned portfolio assets, you realize you have become almost “top heavy” in your equity investing with very little in fixed income, although you do keep cash reserves for emergencies and for moderate investing in the art collection. You’re somewhat concerned about inevitable downturns in the stock market, but with interest rates so low, are not ready to make major portfolio shifts to bonds. In terms of your overall financial picture, debt relative to equity is almost insignificant, with no home mortgage or credit card debt.

You’ve obviously devoted serious thought to the future and to re-assessing your portfolio allocation decisions. Going forward, you might consider “re-balancing” your overall asset allocation using your housing wealth. The term “overlay” comes to mind, because portfolio managers of pension funds, faced with the same concerns about the bond and stock markets, use overlays of derivatives and options to offset their exposure to different segments of the market.

https://www.institutionalinvestor.com/article/b14z9mwbj8vgjj/the-growing-demand-for-overlay-strategies-in-pension-fund-management

Three years have passed. You’re older. The value of your home has probably increased significantly. Interest rates are lower. All these points indicate in favor of refinancing.

https://mutualreverse.com/david-garrison/

You have considered refinancing the home in which you hope to spend your remaining years. The purpose would be to make a one-time meaningful gift in the form of a donor advised fund. You like the idea of making a decisive move today (and taking an immediate tax deduction) without needing to make all the decisions now about which specific charities will benefit. The home values in your neighborhood have increased dramatically, and you’d have the chance to access meaningful dollars and still fit the payments into your budget. Still, you’re hesitant to take on an increased monthly obligation.

It’s possible that accessing housing wealth in a different manner might provide the perfect solution. With a reverse mortgage, you would be accessing dollars to fund your donor-advised fund without taking on an obligation to make payments every month or quarter. As you’ve stated, the growth in your home value could allow you to access meaningful funding for your donor-advised fund. Of course, you would continue to pay the property taxes, insurance, and maintenance costs on the home, but any remaining mortgage obligation you have could be paid off, possibly still leaving funds that could be used in emergencies.

As an alternative approach, you might discuss with your tax advisor setting up the reverse mortgage so as to generate retirement income, using some of your investment assets to fund the charitable initiative.

Some careful thought and planning will be needed, but using housing wealth to fund impact investing can help build your own financial plan while you set about doing your small part to help build a better world!

https://mutualreverse.com/david-garrison/

While inflation has just begun to make itself felt in your budget, your withdrawal levels are likely to be more than adequate to sustain your lifestyle. Your home is fully paid for. In fact, during your first year of retirement, you were able to make some substantial improvements to the property and plan to spend the rest of your life there.

Normally, you consider yourself a long-term thinker, not prone to fear reactions when it comes to investments. However, certain recent world events, including the resurgence in COVID cases, have gotten you thinking about possible market pullbacks. Rather than continuing those monthly withdrawals, you like the idea of dollar cost averaging, allowing the distributions to be used to “buy low” on any dips, without any compulsion on your part to “time the market”.

In short, you are in the process of rethinking the income generation system that has served you well for the first stage of your retirement. While you had originally planned to defer taking Social Security benefits, one consideration is to turn on that income now. There is also the possibility of replacing the investment draws by taking on an additional load of consulting gigs.

Consider using your housing wealth as an alternative source of monthly or quarterly income through a reverse mortgage. You can set up the mortgage as a line of credit, taking fixed payments in precisely the amount you were drawing from your retirement and investment portfolios. However, far fewer dollars might be needed, since the draws from a reverse mortgage are tax free.

In the process of “rethinking” the income generation system that has served you well for the first stage of your retirement, think of using your own housing wealth.