HECM Planning May Be the Linch Pin in Your Retirement Plan
Financial stability in retirement is critical to happiness in your golden years. Home Equity Conversion Mortgage (HECM) strategies can be the financial footings to help create a firm foundation to build a retirement system that can make your senior years really enjoyable. A financial course of action with HECM strategies can leverage retirement resources and bring seniors into the middle class.
For those seniors age 62+, there are three basic HECM strategies that can be turned into retirement strategies that can have significant impact generating tax-free income, purchasing a home with no mortgage payment and creating a retirement cash resource.
Sometimes seniors just need more cash flow. A HECM reverse mortgage can generate tax-free income, income not includable on the provisional income test for Social Security benefit taxation. So it’s conceivable without any other income Social Security benefits and reverse mortgage income could both be tax-free. This is a significant strategy for cash strapped seniors who saved little for retirement and can keep both income sources from ordinary income taxation.
One important goal with most seniors is to enter retirement without debt and that includes a mortgage. But a new trend among baby boomers is maintaining a mortgage during retirement because their cash and savings have been used for elder care for their parents and college tuition for their children. Now you can purchase a home for generally half the purchase price, not to exceed the current cap limits of $625,500. That’s a HECM reverse purchase mortgage. You still have a mortgage, but you don’t have a mortgage payment. Many seniors use the difference in savings to purchase guaranteed lifetime annuities with annual cost-of-living adjustments to pay for the rest of their domestic necessities. This combination strategy can create a financial floor to build upon and free up other resources for investment and legacy planning.
Another strategy uses the HECM equity line of credit to act as a cash reserve or living expenses to delay taking Social Security and qualified plan monies until age 701/2 to maximize benefits and stay engaged in another market cycle. Watch the interview with popular platform speaker, author and leading authority on HECMs, Don Graves, as he introduces the reverse mortgage purchase option.
The only caveat to HECM strategies—often recommended by financial advisors—is to select a retirement home you are committed to living in for the rest of your life.
Nationally syndicated financial columnist and talk show host Steve Savant interviews popular platform speaker, author and nationally recognized HECM authority Don Graves. Steve and Don talk about the power of HECM strategies in retirement. Right on the Money is a financial talk show for consumers distributed to over 280 media outlets, social media networks and financial industrial web portals. (www.rightonthemoneyshow.com)