In your seventh year of retirement (you’re 69, he’s 73), you’re becoming increasingly concerned with rising everyday costs, especially those for food and gasoline. You home is fully paid for and you’ve kept it well-maintained, so that’s not a present concern. As you consider ways to generate more income, you realize that the bulk of your financial assets consists of two quite healthy IRA rollover accounts, You’re worried that substantially increasing the amount you take out of those accounts will increase not only your taxes in general, but the taxes you’re paying on your Social Security benefits. You do own one joint account with tax-free mutual funds and money markets, but you’re comforted by having that as an emergency backup. Your estate plan has been updated, including paid-up life insurance policies that can be used for long term care if needed. You believe that your focus now needs to be on increasing the income stream net of tax.
Assuming your intent is to continuing living in your home, one strategy you might consider is tapping the equity in your home in the form of a reverse mortgage. Regular withdrawals from a HECM set up as a line of credit would be tax free (so you could take less), and would have no effect on MAGI (the Modified Adjusted Gross Income calculation that might increase the tax on your Social Security benefits). You might even be able to reduce your regular IRA withdrawals, further enhancing your level of after-tax net income, all without tapping your emergency backup account.
You’ve obviously devoted careful thought to your overall financial situation, examining options for keeping up with rising costs of living. A reverse mortgage might be the “new” idea for accomplishing that very goal without triggering “new”: taxes!
https://mutualreverse.com/david-garrison
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).
Please consult a tax advisor. If your heirs want to keep the home after your death, they will have to repay either the full loan balance or 95% of the home’s appraised value, whichever is less. 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. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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