HECM Line of Credit

Reverse Mortgage Funds Social Security Delay

NOTE: this is a slight revision to the post published in March 2014.

Delaying Social Security can significantly boost lifetime retirement income but creates a shortfall while waiting. A case study used a HECM reverse mortgage line of credit to partially replace early Social Security benefits. The study’s Monte Carlo retirement success rate was only 5% if Social Security started at 62 and did not use housing wealth. The success rate jumped to 90% by delaying Social Security to age 70 and using  a reverse mortgage. The study was designed to show a positive impact of using a reverse mortgage, and did! Besides adding to the retiree’s available resources, another key is the reverse mortgage draws are tax-free for a retiree in a high tax bracket. The SS Delay Case Study describes the study in detail and discusses factors affecting the reverse mortgage’s impact. A SS Delay Case Study Powerpoint deck is also available.

5 replies »

  1. Tom nice blog and excellent post. I must confess a degree of ignorance about reverse mortgages and have never used them as a planning tool with clients. The only post on my blog about them was from an outside contributor. Great info on this blog, readers will certainly benefit from your knowledge and experience.

  2. Tom, this is a great blog. Your experience and analytical expertise will help open the door to some great conversations about reverse mortgages. The concept of delayed gratification by waiting for the higher social security benefit makes sense. Using the reverse mortgage to bridge that gap is a great option. Nice ideas, keep them coming.

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