Despite economic instability in recent years, many seniors are only now learning they can strategically use reverse mortgages to enhance their financial planning. As loans that bring extra income without required monthly principal and interest payments, reverse mortgages make great tools for boosting current retirement assets into large future funds. Here’s some ways that reverse mortgages can improve your finances:
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Delay Retirement Assets
Sadly, most retirees were forced to dip into their savings during 2020, reducing their retirement funds. Reverse mortgages help rebuild financial plans as retirees can live on their home’s equity, giving time for savings and assets to grow back. Similarly, a reverse mortgage gives more time for social security and pension benefits to increase as retirees further delay using those assets.
Pay Off Debt
Proper financial planning requires not only a strategy for your future savings, but also reducing lingering expenses such as monthly mortgages or debt. Reverse mortgages help protect your finances by paying off debts, which puts more money into your pocket and brings peace of mind.
Protect Financial Portfolio in Down Market
During market recession or instability, reverse mortgages help secure retiree financial portfolios that would otherwise be derailed by fluctuating stocks. Rather than pull your stocks and face withdrawal penalties, you can use funds from a reverse mortgage to sustain income cash flow. In doing so, your stock investments will have room to recover whenever the economy stabilizes.
Control Home Equity Payment Method
Financial planning for retirement demands managing income flow. Therefore, reverse mortgages allow borrowers control over how home-equity funds are received. These payments come as a monthly tenure, a total lump sum for immediate access, or as a line of credit that can grow over time and accumulate to a larger sum.
Downsize
Reverse mortgages must be paid in full upon the borrower’s death or vacating the home. Retirees can still benefit from a home sale by receiving the leftover proceeds after the mortgage is paid off. They can use the proceeds to purchase a smaller home that requires less maintenance and expense.
Fund Assisted Living
It is crucial that retirement financial plans accommodate retirement income for long-term care. Despite what most seniors believe, Medicare does not cover these expenses. Without sufficient savings to pay for long-term care, seniors could suffer financial and physical harm. Reverse mortgages ease such concerns by providing income for injuries and medication, enabling long-term care security without dipping into private funds.
Starting Your Reverse Mortgage Plan
For aging clients, the responsibilities of a reverse mortgage seem a small price to pay for stability in their future retirement. But considering the number of reverse mortgage options, it’s important that retirees select the right strategy for their needs. For more information on reverse mortgages, contact us today to schedule your free consultation.
