With the last two years of your careers having been marked by the pandemic (each of you, despite having been vaccinated and boosted, has now had COVID twice!), you were moved to make two admittedly emotionally driven decisions. First, despite the drop in the value of your accounts, you stuck with your original plan to retire. Secondly, you decided to take your two dream trips in the early years of retirement (you enjoyed a luxury cruise earlier this year and have another scheduled for next year), rather than waiting “until the market recovers” before spending the money. Careful savers over the years, you now feel “Carpe diem” is the motto to adopt.
According to plan, you’ve retired your mortgage, re-roofed the home, and installed new heating and air conditioning. While all these moves were designed to give you a sense of security, you realize that, if you continue to follow your original monthly withdrawal plan out of your portfolios – in addition to making large withdrawals to fund the upcoming trip expenses (carpe diem notwithstanding) – you will probably run out of money much sooner than years of life!.
Perhaps it’s time “seize” the opportunity inherent in your own housing wealth, in the form of a government-insured reverse mortgage line of credit, allowing your investment accounts time to recover value over the next several years, funding your ongoing income needs – and the costs of your second round of travel adventures – through distributions from that mortgage. Remember that fewer dollars will probably be needed, since draws from a reverse mortgage are tax-free.
While you cannot know what the future will bring – either in terms of the investment markets or in terms of your personal lives, a reverse mortgage might represent an opportunity worth “seizing”!
Please consult a tax advisor. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency.