With no training or expertise in finance, you have always liked to keep yourself informed by reading about the investment markets and the economy in general. The other day you came across a piece from Morningstar that seems to sum up your own situation: “retirees have run headlong into what retirement researchers call sequence risk, imperiling the portfolio’s ability to last over the whole of a typical retirement spending horizon…”
Divorced more than a decade ago, you retired from your nursing career at the height of the pandemic. Now 68, you have been supplementing your income (Social Security and regular withdrawals from your retirement accounts) with part time medical billing work. You own your home, which is paid for and which is in good repair.
Generally speaking, you feel in control of your finances. At the same time, stock market losses have definitely affected the value of your retirement assets. While you enjoy your remote “gig” work, you do not want to have to return to direct patient care, and are concerned about the longevity of your investment accounts given your need for regular income.
An option to consider would be setting up a reverse mortgage line of credit using your housing wealth. During periods when your investment accounts might decline in value, you would partially or fully substitute withdrawals of your own home equity for withdrawals from investments.
In the Morningstar article you cited, two strategies mentioned for managing retirement income flow include “forgoing inflation increases and taking a 10% income reduction following a portfolio loss”. Withdrawals from your own housing assets would “pad” your income, making up for dollars you choose to “forgo” in terms of retirement pan withdrawals.
Your housing wealth can be used to “pad” income and “cushion” the effects of stock market volatility.