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#134: Using a reverse mortgage to move ahead following a job loss


While you had each planned to work up until social security “normal retirement age”, you have just been notified (you are now 63) of an involuntary severance. The company will continue to pay your salary and benefits through the end of this year, you’ve learned. While your wife’s job seems secure, this is going to represent a massive cut in income, just when you were trying to beef up your savings after having helped one of your daughters through a crisis.

This is a second marriage for you, and you remain the sole owner of your home, which you have kept in fine shape, and which would have been totally paid for well before your planned retirement date. Fortunately, there are no pending maintenance issues or structural replacement needs, and you fully expect to continue living in that home for the foreseeable future.  A positive is that you are debt-free aside from the remaining mortgage payments on the home. Still not totally recovered from the shock of the job loss, you have already begun to look for alternate employment. Confident that you have four to five good years to offer a new employer, frankly, the prospect of being able to earn anywhere near your current income, much less with health insurance benefits included, appear dim.

You’ve described several very positive factors present in this admittedly negative – and all too common these days) situation – the continuation of salary and benefits through year-end, no consumer debt, a working spouse, and your own eagerness to find a way to continue generating income.  One path to consider is tapping into your “housing wealth” in the form of a reverse mortgage line of credit. There would be immediate relief in the sense that no monthly mortgage payment would be needed, so that the payments you would have made over the next few years might go towards your original plan of “beefing” up your retirement contributions.