Your plan had been to work at least until your so-called Social Security “normal retirement age” of 67, but here you are, barely 62, victim of a pandemic-based downsizing. You have been applying for jobs and will certainly find a way to earn some money, but there is little prospect of continuing your former standard of living. You’ve considered taking early Social Security to avoid the cash crunch, but learned, much to your horror, that the reduction in your monthly benefit would be in the four figure range!
You do have a 401k plan, but it was impacted in the course of the divorce (in order to keep the home, which has only a modest mortgage balance remaining, you needed to reduce your share of other assets). In any event, you’ve learned, now that you’re no longer part of the company, you cannot tap the 401k through a loan; any withdrawal would be fully taxable. There could possibly be an inheritance in your future, but you can’t rely on that and need to find ways to bridge the financial gaps now. Although your credit record is good, without being able to demonstrate a reliable current income source, you’re not sure you’d qualify for a second mortgage or home equity line of credit.
In order to bridge the financial gap between now and Normal Retirement Age, consider using the equity in your home as the stopgap funding source. In a government-insured reverse mortgage line of credit, the equity in your home will serve as the loan collateral. Not only will there be no obligation for you to make regular monthly mortgage payments,* but you can begin taking “draws” to supplement your income.
Over the course of the coming five years, depending on your success in finding part time or full time work, you can decide at any point to stop making withdrawals and even to begin optional repayments. So long as you keep up with property taxes, insurance, and regular maintenance of the home, you will not ever be obligated to make monthly mortgage payments.* Meanwhile, your 401K balance can continue to grow tax-deferred, while your Social Security benefit is “growinng” to its “normal retirement” size.
https://mutualreverse.com/david-garrison
*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.orgEqual Housing Lender