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Using a Reverse Mortgage to Delay Social Security Until Age 70

You Might Easily Live to 90 or even 100

Try this little experiment. Take this link and find out what your life expectancy is according to the experts.

For instance, if you are a 65-year old female and a little overweight, don’t smoke or drink, don’t have high blood pressure or cholesterol, walk for half an hour 4 times a week, and haven’t had any recent traffic tickets, John Hancock thinks you could live to be 100 years old.

Even if you’re overweight, take pills for high blood pressure and cholesterol, are only moderately active, and drink a couple of glasses of wine a day, they predict you’re going to make 90.

The social security folks will tell you that if you choose to wait until 70-years old to take your checks, the added 27% in your monthly check will balance out with the missed checks from 67 to 70 when you hit 81. After that, your extra amount will be all to your benefit. Of course taking the money early, at age 62, will create an even bigger loss if you live to age 80.

There are many things to take into consideration as you review your choices concerning Social Security. How old are you likely to live? It isn’t just about your current health, but also your DNA. How old did your parents live to be? Did they die early from some disease that you are likely to be susceptible to?

You also want to consider tax issues. You will be taxed on your Social Security payments just like any other income. If you are still earning substantial amounts in your 60’s, your Social Security Income may be taxed at high rates, dramatically lowering the benefits of taking the checks early.

This article can’t possibly consider all the potential options that may or may not be right for you. However, there is a benefit to the Reverse Mortgage option that comes into play in making your decision.

You can opt to use a reverse mortgage as a line of credit (LOC). If you use this option, you could delay taking your Social Security check and use the LOC as a supplement to your income as needed to delay taking Social Security for as long as possible. You could then use the higher Social Security check to pay off any borrowing you did on the LOC.

Of course, there would be interest on amounts borrowed through the LOC until the amounts are repaid, but the interest rate would be low. On the other side, you may have had higher taxes on the Social Security Income during your 60’s and the LOC funds would be tax free. If you repay the LOC, the interest you pay is tax deductible.

In general (unless you are receiving your Social Security as a Spousal benefit) you are better off to wait until age 70 to get your benefits (age 67 if spousal benefits), assuming you will live to age 80.

If you think you would benefit from the use of a Reverse Mortgage for income planning or for any other reason, check In with Brandon Webb. He will help you wade through the complicated formulas, and help you see if you can better reach your goals using a reverse mortgage. Call 800-486-8786 Ext. 868 for a free consultation.

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