As recently as two-three years ago, things seemed simpler than they now appear to you. The plan was for your wife to retire at the end of this year (she just turned 66), but she has changed the date to summer of next calendar year. You, meanwhile, had originally decided to work through 2024 and retire in spring 2025. Now, you’re not so sure. In fact, at age 67, you feel fortunate to have kept your position at work, but now feel less confident given the state of the economy.
Together, you had done the necessary retirement “prep”, making sure your insurance and estate planning documents were in order, and planning the monthly and annual budget. Home is paid for, and you plan to stay in it indefinitely – you allowed for maintenance updates. You thought you were reasonably prepared for the next chapter of life, but, looking at the drop in value in both your retirement accounts has scared you silly.
Once your wife retires, you realize, your jointly held investment accounts would not generate enough income. You’d be forced to tap into her rollover account, so taxes would take a toll on the now-shrunken anticipated income amount. You had a couple of trips planned to celebrate retirement, but have put those plans on hold. Income planning must be the absolute priority, you’ve decided…
Since you plan to continue to occupy your home, using the equity you’ve built up as a source of income flow during the early years of retirement will allow time for your investment accounts to recover in value. What’s more, your home has probably significantly appreciated in value over the past few years, meaning there is a larger “pool” of potential funds to tap through tax free withdrawals.
With so many couples describing themselves as in precisely the dilemma you describe, it’s no wonder that many, like your wife, have felt it necessary to postpone retirement. Many others have tapped into their home equity in the form of a line of credit. (A recent Wall Street Journal survey revealed that there has been a 40% increase in would-be retirees tapping into their housing wealth using a home equity line of credit!)
https://www.wsj.com/articles/more-americans-tap-home-equity-for-financial-safety-net-11668572616
Unlike such traditional arrangements, the modern reverse mortgage does not require monthly payments, cannot be frozen, cancelled or reduced, and importantly, is guaranteed to grow in value at the same rate interest is accruing on the loan balance.
Whether you choose to – and whether or not you’re given the chance to – continue working for the next couple of years, your Reverse Mortgage Line of Credit can “bridge the gap”, allowing your investment and retirement accounts the chance to recover in value, while affording you the freedom to move forward with your retirement plans.
Your investment accounts need time to recover, and a reverse mortgage might help that happen.