How a Reverse Mortgage Can Help Your Retirement

By Accel Mortgage
November 20, 2022

One of the first things to do when you are considering retirement is to take inventory of your assets. If you own a home, this can be your greatest asset, and a reverse mortgage can help you leverage it. Here are five ways a reverse mortgage can help your retirement.

5 Ways a Reverse Mortgage Can Help

1. Prevent from Selling Investments

If you enter retirement and you have money actively invested in the stock market you may think about withdrawing funds. Sometimes, however, it is not a good time to withdraw those funds as the market might be in an overall downturn.

In these cases, taking out a reverse mortgage may be a better option to cover expenses until the market is back up again and the stocks can be sold at a profit rather than a loss.

2. Delay Social Security

Delaying social security payments for a couple of extra years, until age 70, increases the benefits by 6%-8%, but most people leave their jobs around 65. In some industries, there are even forced retirements at a certain age.

If you’re in this situation, a reverse mortgage can bridge the gap for the years between retirement and the time you begin receiving payments. Thus, resulting in large payments each month when you claim benefits.

3. Making an Inheritance Easier

Throughout the years, inheritance has become more challenging than it used to be when it comes to homes. Not only do your children likely have their own homes and are unlikely to live in yours, but they would also be responsible for paying the taxes and fees associated with selling the home to receive any money.

Plus, the market may be difficult at the time of your death, leaving your heirs with a home they can’t sell, creating a tax burden. With a reverse mortgage, you can leave your financial assets, like a 401K or savings account, to your heirs, making it easier for them.

4. An Emergency Fund

Funding for your retirement can be challenging. You don’t know how much time you have or what health problems you may face. Although you may have planned your retirement well financially, something unexpected may cause these plans to fall through, leaving you without options.

With a reverse mortgage, it is easier to build an emergency fund. It’s also easier to leave investments untouched to use when an emergency arises.

5. Money for Roth IRA Conversion

If you want to maximize your estate for your heirs, you may consider converting from a traditional to a Roth IRA. This allows your savings to grow unaffected by RMDs (required minimum distributions), potentially leaving more for your loved ones. Your heirs can also benefit from tax-free withdrawals during their lifetimes. However, to convert your traditional IRA to a Roth IRA, you’ll need to pay the taxes upfront.

A reverse mortgage can provide the much-needed money to cover these taxes, allowing the retiree to reap the benefits of an IRA conversion.

Learn More About a Reverse Mortgage

Overall, a reverse mortgage can become a great asset in your life as you retire. So whether you need the money to convert an IRA or want your heirs to have an easier inheritance, a reverse mortgage is a great option.

Contact Accel Mortgage today to request rates and to learn how a reverse mortgage may be right for you.

Your First Step Starts Here

Whether you’re a first-time homebuyer, are interested in refinancing, or are over 62 and looking to do a reverse mortgage, we’re a Pasadena mortgage broker that can help you reach your goal.