Now in your third year of retirement, (in both your cases precipitated by COVID-related downsizing), the two of you are becoming concerned with all the pundits’ warnings of oncoming recession. The original plan was for you to work three more years and retire at age 67 (66 for her).Thankfully, you had each been employed for years in companies that offered generous retirement plan matches. With no children and a strong savings mentality, you have been able to totally avoid credit card debt and even own both your automobiles outright. In mere months, your mortgage will be totally paid off.
You have not applied for Social security benefits and are still hoping to wait until Normal Retirement Age (for you in a year, for her, two), and have been making regular withdrawals from both rollover accounts, with one-time necessary purchases coming out of your jointly owned savings and investments.
You follow the financial news, noting that, while the S&P500 is up significantly, you’re starting to read dire predictions such as this one in U.S. News” “Geopolitical risks are adding to that fear of further market decline..” Still in the starting years of retirement, you’re concerned about your own long term financial future. The term “sequence of returns”, describing the potential disastrous effect on retirees when income is derived from portfolios subjected to low returns and high inflation.
Consider “reversing the sequence of returns“ by using housing wealth for support. Applying for a reverse mortgage on your home, you can establish an equity line of credit, In the event of a market downturn, you would replace withdrawals out of your investment and retirement accounts with withdrawals from the equity line of credit. You might even explore using the reverse mortgage to defer Social security benefits for one or both of you, allowing the benefit to increase.
“ Unfortunately, the odds of an economic contraction remain elevated” Mark Hamrick of Bankrate wrote recently. But, whether that prediction proves accurate or not, you have the opportunity to be proactive in managing your long-term retirement finances by using the equity in your home.
If you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here (and scroll down).
Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.