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#6 “Annuitizing” Housing Wealth Through a Reverse Mortgage


Now in your fifth year of retirement, you’ve been generally satisfied with the plan you had set up for automatic quarterly withdrawals out of both your rollover account and your non qualified investment account. Those withdrawals notwithstanding, both accounts have increased substantially in value.

While inflation has just begun to make itself felt in your budget, your withdrawal levels are likely to be more than adequate to sustain your lifestyle. Your home is fully paid for. In fact, during your first year of retirement, you were able to make some substantial improvements to the property and plan to spend the rest of your life there.

Normally, you consider yourself a long-term thinker, not prone to fear reactions when it comes to investments. However, certain recent world events, including the resurgence in COVID cases, have gotten you thinking about possible market pullbacks. Rather than continuing those monthly withdrawals, you like the idea of dollar cost averaging, allowing the distributions to be used to “buy low” on any dips, without any compulsion on your part to “time the market”.

In short, you are in the process of rethinking the income generation system that has served you well for the first stage of your retirement. While you had originally planned to defer taking Social Security benefits, one consideration is to turn on that income now. There is also the possibility of replacing the investment draws by taking on an additional load of consulting gigs.

Consider using your housing wealth as an alternative source of monthly or quarterly income through a reverse mortgage. You can set up the mortgage as a line of credit, taking fixed payments in precisely the amount you were drawing from your retirement and investment portfolios. However, far fewer dollars might be needed, since the draws from a reverse mortgage are tax free.

In the process of “rethinking” the income generation system that has served you well for the first stage of your retirement, think of using your own housing wealth.