2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894
January 1st, 2022
At age 65, you’re almost one full year into what you call “3/4 retirement”, having quit full- time employment at the end of February, 2021. So far, so good; with your planned monthly withdrawals and a couple of tutoring gigs, you’ve been easily able to cover all your lifestyle needs. However, you’re concerned about continuing this level of portfolio withdrawals if there are sharp dips in the stock market over the next year or so. Because you will have paid off your home by this summer, there will be one less monthly expense you need to worry about. You’ve estimated that you could cut expenses by one fourth at the most, but are hoping that won’t be necessary.
When managing your retirement budget, consider all your assets, not only your investment portfolio. Your housing wealth can act as a buffer when volatility appears to threaten the stability of your portfolio assets. If, as you fear, the stock market were to experience losses during the coming year, you could draw from your reverse mortgage line of credit until the market stabilizes. Because the proceeds from your reverse mortgage credit are not considered income for tax purposes, it’s possible that you would need to take out smaller amounts than you now receive from your portfolio withdrawals.
It sounds as if you’ve done some careful planning, but, like many retirees, are very concerned with stabilizing your income flow in the face of market fluctuations and maintaining purchasing power over the years. A reverse mortgage line of credit might provide a useful “backup plan”, with home equity serving to “buffer” the inevitable ups and downs of the market.