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#168: Deferring Social Security benefits by using a reverse mortgage


When you retired a little over a year ago at age 66, your intention was to defer claiming Social Security benefits until age 70, so as to collect the maximum benefit possible. Now, after several unexpected home repairs and a big dental expense, not to mention the unexpectedly high costs of food and gasoline, it has become painfully obvious that your will be in danger of over-drawing your investment and IRA Rollover accounts to keep up with it all unless you do file for Social Security..On the positive side, your home was fully paid for prior to your retiring, and neither of your children wants or needs help (nor, on the other hand, would you ever want to request help from them).

Your decision to defer Social Security benefits makes a lot of sense, because for each year you wait past your “full retirement age”, 8% is added to your benefit. As you have surely realized, you cannot rely on having an increase of that amount or greater on your investment accounts, particularly since you are already drawing on those accounts.

You might consider turning to what is probably your largest asset, the equity built up in your home, as a source of income between now and your age 70. With a government-insured reverse mortgage, you will be able to make monthly or quarterly withdrawals, with no obligation to make monthly mortgage payments; the home itself will serve as collateral for the loan. Whatever portion of your home equity is not being used will continue to be credited with growth at the same rate as the interest being charged on the outstanding loan balance.

Once you’ve reached the magic age of 70 and are able to claim maximum Social Security benefits, you can pause those regular mortgage withdrawals.

Putting your housing wealth “to work”, while avoiding a drain on your retirement assets can be a winning way to supply an income stream while you wait.

Readers, 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).

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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.