Over the years, when the grandkids were younger, the two of you always made efforts to help fund their college costs by both making direct cash gifts at holiday time and also by contributing to both their educational savings accounts. Now widowed yourself and with both grandchildren now started on their respective professional careers, you considered the college funding challenge a thing of the past. To your dismay, during the Christmas gathering, you discovered that lingering student debt continues to be a big challenge for both the grandkids and their parents. (Apparently, a recent Supreme Court ruling cancelled some debt relief on which they’d been counting.)

Years ago, as part of your estate planning, you’d included student loan payoffs as part of your legacy to your son and daughter (to the extent they had signed for student loans for their children), but thought that issue was largely a thing of the past. Now in the process of updating your estate planning documents, you’re thinking in terms of more immediate assistance. At the same time, you need to consider what impact significant monetary gifts might have on your own retirement finances.  (With a fully paid for home in excellent condition, you are still concerned with possible future health costs.)

Consider using the equity in your home to help the two graduates and their parents repay the student loan debt. With a Home Equity Conversion Mortgage, or HECM, you will be able to tap your housing wealth in the form of a line of credit, using the funds to bring meaningful relief to your children and grandchildren while the student loan debt relief issues are being debated by the U.S. Department of Education. Most important, you will not be impacting your own retirement finances.

A reverse mortgage can be a way to offer relief to your adult children, allowing the grandchildren to focus on building their careers and you to enjoy your own retirement.

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).

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“I’m not sure just where I’ll be going, but I can’t put up with all the repairs and upkeep this place needs. There are always things that need to be fixed and they are taking up more and more of my time, so I’ve decided to move to a retirement facility this spring. I’ve enjoyed hosting the monthly pitch-in lunches and book discussions, but I’ll be spending the next couple of months sorting things out and getting rid of a lot of stuff, and so will no longer be able to continue hosting our book club.”  This recent email has caused you to consider your own living arrangements.

A few years younger than this friend (a widower now in his eighties), you’ve taken for granted being able to continue living in your own home for many years to come, hopefully for your entire lifetime. You’ve kept the house in good shape, with a fairly new roof and a new heating/hot water system. A widower yourself, you are reassured by the fact that both your adult children, while they live out of state, are in constant touch with you. With a solid Long-Term Care insurance plan in place, you believe remaining in your own place is feasible.

On the other hand, you can’t help viewing that email message from the book club host as something of a warning call. You feel reasonably confident that your retirement assets will be sufficient to cover your regular lifestyle needs, but if major things were to go wrong with your home (or if home health care expenses were to exceed your insurance coverage). In short, you’ve been forced to confront some scary “what ifs”.

You might considerusing the equity built up in your home as the answer to those “what-if” scenarios. With a government-insured reverse mortgage, you’ll have a source of funds to use for “aging in place” home adaptations and to fund possible home health care needs. You will not be obligated to make monthly mortgage payments, with the home itself serving as collateral for the loan, so your current budget will remain unaffected. In fact, whatever portion of your home equity is not being used will continue to be credited with growth at the same rate as the interest being charged on the outstanding loan balance.

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Facing future uncertainties can feel a lot more comfortable with a reverse mortgage plan in place.

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).

When you retired a little over a year ago at age 66, your intention was to defer claiming Social Security benefits until age 70, so as to collect the maximum benefit possible. Now, after several unexpected home repairs and a big dental expense, not to mention the unexpectedly high costs of food and gasoline, it has become painfully obvious that your will be in danger of over-drawing your investment and IRA Rollover accounts to keep up with it all unless you do file for Social Security..On the positive side, your home was fully paid for prior to your retiring, and neither of your children wants or needs help (nor, on the other hand, would you ever want to request help from them).

Your decision to defer Social Security benefits makes a lot of sense, because for each year you wait past your “full retirement age”, 8% is added to your benefit. As you have surely realized, you cannot rely on having an increase of that amount or greater on your investment accounts, particularly since you are already drawing on those accounts.

You might consider turning to what is probably your largest asset, the equity built up in your home, as a source of income between now and your age 70. With a government-insured reverse mortgage, you will be able to make monthly or quarterly withdrawals, with no obligation to make monthly mortgage payments; the home itself will serve as collateral for the loan. Whatever portion of your home equity is not being used will continue to be credited with growth at the same rate as the interest being charged on the outstanding loan balance.

Once you’ve reached the magic age of 70 and are able to claim maximum Social Security benefits, you can pause those regular mortgage withdrawals.

Putting your housing wealth “to work”, while avoiding a drain on your retirement assets can be a winning way to supply an income stream while you wait.

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).

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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.

Four years ago, in establishing your reverse mortgage loan, you had been recently divorced. Your ex was moving to another state and you kept sole ownership of the home. Establishing a reverse mortgage at the time enabled you to revamp the home; you have now paid back almost all of the outstanding balance. While your plan continues to be aging in place in this very home, your situation has changed dramatically in that you have a new life companion sharing the space. You’re wondering if it is feasible to refinance the reverse mortgage, including her as a co-borrower. You are now 68. At age 66, she has resources of her own and has been, from the start, an equal contributor to all your living expenses. There are no plans to marry, and you have updated each of your estate plans so as to provide separately for your respective heirs.

Co-borrowers on a reverse mortgage don’t need to be married, so you can certainly apply together for a new mortgage. You must have enough remaining equity in the home to qualify, but, given the general rise in home values, that might well be the case. In addition, the HECM limit on loans has risen, which will work in your favor. The new loan amount will be based on your respective ages (the fact that you’re four years older than you were the first time will work in your favor), the new appraised value, and on current interest rates.

As was true the first time, you (now both of you) will need to show you have the financial resources to pay property taxes, homeowners’ insurance, and maintenance costs. Together, you’ll participate in the same kind of consumer information session by a HUD-approved counselor as you did the first time.

As you already know, you will be under no obligation to make monthly mortgage payments, with the home itself serving as loan collateral. Whatever portion of your home equity is not being used will continue to grow, providing a reserve for possible future increases in the insurance costs.

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).

The postal service has delivered some very bad news to you in the form of a major increase in the quarterly premium for both of your Long-Term Care Insurance policies. None of the choices offered is savory: In order to maintain your current coverage (which includes an annual increase in benefit), your combined quarterly premium will be increased by a four figure total each quarter. Needless to say, the company offers no guarantee that there won’t be further premium increases in coming years.There are two other options offered: dropping the inflation rider, or reducing the coverage from lifetime to a limited number of years.

While you are mortgage and consumer debt-free, paying the new quarterly amount needed to keep your current level of coverage intact is going to mean changing the Systematic Withdrawal Income Plan you have set up on your investment accounts, increasing the very real possibility of running out of money before you run out of years. Both in your late sixties, you have so far been largely free of major health problems, but are afraid of losing the protection against deteriorating health in your later years.

Consider tapping your housing wealth,(the equity built up in your home) to finance the Long Term Care insurance premiums. With a government-guaranteed HECM reverse mortgage, you can withdraw funds as needed to pay the premiums needed to continue your present levels of coverage (including the inflation riders on the policies). You will be under no obligation to make monthly mortgage payments; the home itself will serve as collateral for the loan begin to. Whatever portion of your home equity is not being used will continue to grow, providing a reserve for possible future increases in the insurance costs. Meanwhile, your investment income plan can continue undisturbed.

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).

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This is a hypothetical situation. 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.

While your late wife’s protracted illness forced you to put plans of launching a specialty LLC consulting/coaching practice on hold, you are now ready, at age 69, to get back to the project.. In reanalyzing your finances, you realize that, since you plan to work out of your home office, there will be few “capital expenses”, and that your retirement income is sufficient to cover your normal costs of living.

In order to promote the venture, however, you plan to engage the services of both a public relations firm and a company that creates podcasts, along with those of a business law firm to  help with contracts. Ultimately, you are confident you can more than recover these costs. Meanwhile, however, reluctant to draw down your investment account or trigger additional tax liabilities by taking withdrawals out of your SEP-IRA and/or your IRA  rollover account, you are planning to apply for a mortgage on your home to the tune of $60,000. That amount should be sufficient to cover the promotional and legal costs for the new business until you’ve established a regular clientele.

Rather than tapping the equity built up in your home through a “forward” mortgage, you might consider a HECM reverse mortgage set up as a line of credit. With no monthly mortgage payments required and no fixed due date for repayment (other than when you leave the home or sell it), there will be much more flexibility, with you drawing only the amounts actually needed.  If you are able to generate business more quickly than anticipated, you can stop taking the withdrawals and even begin to replenish the equity. Whatever portion of your equity is not being used will continue to grow, providing a reserve for possible future personal or business needs..

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).

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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.

Following a series of health scares, your parents, both in their early eighties, recently made the decision to move into a local high-end continuing care community. Once their home is sold, the proceeds should be more than enough to cover the six-figure upfront “buy in” cost, but they do not have sufficient liquid and investment assets to cover the payment without affecting their ongoing lifestyle needs. You don’t want your parents to be under tremendous pressure, trying to coordinate the timing of selling the home, paying to get on the waiting list for the new community, all while making myriad decisions about décor, which furnishings to take with them, etc., especially since neither is in perfect health.

You agree that a continuing care-type retirement community is your parents’ best choice. They will start out with independent living, continuing to see their regular doctors, then later, if needed, be able to transition to assisted living without worrying about a big increase in the monthly fee.

To ease the pressure on them, you plan to pull money out of your own investments to finance the fee. At the right time, you will oversee the listing and selling of their home. (As their only living child, you would be the one inheriting the home in any event.). Meanwhile, you’ve scheduled meetings with your own tax advisor and financial planner to discuss which of your own holdings would be best to liquidate without overly severe tax consequences. (Now in your early sixties, you are not worried about early withdrawal penalties from retirement plans, but you are concerned about taxes and even about the possible estate planning ramifications of a six-figure gift to your parents.)

As opposed to liquidating investments in order to finance the community “buy-in” fee for your parents, consider tapping into the equity in your own home in the form of a reverse mortgage, designed for those 62 and better. With no need to make monthly mortgage payments, you can make a lump sum withdrawal from your equity to pay the fee for the continuing care community on behalf of your parents. (Later, after your parent’s home is sold, you might discuss any gift tax  or estate planning ramifications with your  advisors, who can help determine the best mechanism for using the proceeds to “restore” the equity in yours.  

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).

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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.

As a financial advisor, you’ve tried to steer clear of extremes, believing that your clients’ retirement and tax planning should be centered around the preservation of assets with sufficient growth to outpace inflation. Particularly in recent years, you’ve focused on helping your clients avoid scams and “get-rich-quick” schemes.

Because your clients tend to be in the above-average net worth category, you have never felt the need to include reverse mortgages in your discussions of retirement planning. Although you read in the Journal of Accountancy that “practitioners should be prepared to discuss the advantages and disadvantages of reverse mortgages, you perceive that your more elderly clients have limited ability to comprehend the complexities of such a transaction involving their most treasured asset.

“Reverse mortgages are a scam,” Jamie Hopkins of Carson Coaching hears this all too often, he says, not only from consumers, but even sometimes from financial advisors like you.  In fact, however, HECM (Home Equity Conversion Mortgages) represent one of the most highly regulated and secure financial products out there, backed by the Federal Housing Authority.

 But, just as is true of all products, Hopkins reminds viewers, reverse mortgages in and of themselves are neither good nor evil. They must be used as part of a plan. In fact, using reverse mortgages strategically – and early in retirement, he emphasizes – can prove a very smart strategy.

If your home is just an asset, Amy Fontinelle writes in Investopedia agrees (as opposed to one that’s been in the family for decades or generations), “leveraging it for a more comfortable retirement might be the best way to use it. And, as Jamie P. Hopkins of Carson Coaching so cogently expresses the concept, for advisors and their retiree clients alike, it’s time to think of housing wealth as a line of first resort.

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).

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Now in your third year of retirement, (in both your cases precipitated by COVID-related downsizing), the two of you are becoming concerned with all the pundits’ warnings of oncoming recession. The original plan was for you to work three more years and retire at age 67 (66 for her).Thankfully, you had each been employed for years in companies that offered generous retirement plan matches. With no children and a strong savings mentality, you have been able to totally avoid credit card debt and even own both your automobiles outright. In mere months, your mortgage will be totally paid off.

You have not applied for Social security benefits and are still hoping to wait until Normal Retirement Age (for you in a year, for her, two), and have been making regular withdrawals from both rollover accounts, with one-time necessary purchases coming out of your jointly owned savings and investments.

You follow the financial news, noting that, while the S&P500 is up significantly, you’re starting to read dire predictions such as this one in U.S. News” “Geopolitical risks are adding to that fear of further market decline..” Still in the starting years of retirement, you’re concerned about your own long term financial future. The term “sequence of returns”, describing the potential disastrous effect on retirees when income is derived from portfolios subjected to low returns and high inflation.

https://money.usnews.com/investing/articles/will-the-stock-market-crash-risk-factors#:~:text=In%202023%2C%20the%20S%26P%20is,toward%20the%20end%20of%202023.

Consider “reversing the sequence of returns“ by using housing wealth for support. Applying for a reverse mortgage on your home, you can establish an equity line of credit, In the event of a market downturn, you would replace withdrawals out of your investment and retirement accounts with withdrawals from the equity line of credit. You might even explore using the reverse mortgage to defer Social security benefits for one or both of you, allowing the benefit to increase.

“ Unfortunately, the odds of an economic contraction remain elevated” Mark Hamrick of Bankrate wrote recently. But, whether that prediction proves accurate or not, you have the opportunity to be proactive in managing your long-term retirement finances by using the equity in your home.

https://www.bankrate.com/banking/federal-reserve/economic-indicator-survey-recession-risks-october-2023/#:~:text=Our%20forecast%20is%20for%20a,likely%20path%20for%20the%20economy.

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).

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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.