By themselves, reverse mortgages offer various benefits to the borrowers who use them. But when included as part of a financial planning strategy, there are a number of ways these loans can help strengthen retirement resources.
In the past, reverse mortgages have been misrepresented as a loan of last resort for retirees with financial hardship, however, these loans are “versatile financial planning tools” for borrowers to leverage in a strategic way, says a recent article from Equities.com.
The article explores several “tactical methods” where a reverse mortgage can be used in financial planning to enhance a person’s retirement years.
For one, the article suggests reverse mortgages can help delay withdrawals from assets like Social Security benefits and pensions in order to help retirees maximize their future payouts.
Citing the official Social Security website, Equities.com notes that seniors may choose to retire as early as age 62, but doing so may result in a reduction of benefits as much as 30%.
“However, postponing your retirement can result in an increase of up to 8% for each year that payouts are delayed,” the article states. “Using funds from a reverse mortgage instead of drawing upon Social Security until reaching the maximum age of 70 can help you maximize your lifetime benefits.”
Equities.com also suggests that a reverse mortgage can help protect a retiree’s portfolio in a down market.
“In the event of a down market, pulling funds from your reverse mortgage, or supplementing your portfolio with these proceeds can provide a better chance that it will recover from the loss and protect the longevity of your accounts,” the article states.
Read the Equities.com article.
Written by Jason Oliva
