Although grieving the loss of your husband five years ago and continuing through the first two years of your own retirement, you were beginning to feel you had your financial affairs under control. This past year, however things have become increasingly stressful for you. The dramatic drop in the value of your retirement accounts (both your own and the one inherited from your husband), has frightened you. Each IRA has been set up on a Systematic Withdrawal Income plan; you depend on the monthly distributions to maintain your lifestyle.
The rise in costs together with the drop in account values have caused you to seriously reconsider your decision to defer taking Social Security benefits for another two and a half years. (Even considering the much-touted increase in 2023 Social Security benefits, you realize, the monthly amount you’d receive would hardly approach the level of the investment distributions, even on an after-tax basis.) On the other hand, as patient an investor as you are, you know you cannot continue to place a drain on your accounts. Changing to a “safer” investment mix would not only be a mistake, you realize, but severely curtail the distributions over the long haul….
Assessing your overall situation, you can count several positives: You are content to remain in your fully-paid for home, and you have a paid-up long term care policy. It is merely the monthly income plan that has become “out of sync” with today’s reality. Much as you dislike interrupting the planned maximum deferral of Social Security benefits, turning the spigot to “On” appears to be a better idea than depleting your accounts.
A solution to the twin dilemmas you’ve described might be provided through tapping the value built up in your own home. Regular withdrawals out of a reverse mortgage line of credit would replace the systematic investment withdrawals out of the IRAs, allowing those accounts time to “recover”. What’s more, since the reverse mortgage distributions would be tax free, you would need to take less out each month than what you now withdraw from the two IRA accounts. Not only would you be giving those IRAs needed “recovery time”, but it is also quite possible that you could continue, at least for a while, deferring Social Security benefits.
In that sense, your housing equity would be doing double duty, easing your own stress, while allowing both the IRA account and the Social Security “rest and recovery” time!