As we reach retirement age, many of us will consider when the right time is to apply for Social Security benefits. With studies finding that most people lack the proper retirement savings, it can be a scary thought to wonder how you will manage to pay for your golden years.
This unpreparedness is, perhaps, the main reason why a reverse mortgage has become such a popular option in recent times. Provided you are of qualifying age (62 or older) and that you meet the basic requirements (more information on those requirements here), you can tap into the available equity in your home without rendering a monthly payment (the balance is paid off from the sale of your home after your death).
A commonly asked question is: can I defer Social Security benefits with a reverse mortgage?
The simple answer is: yes.
You can get approved for a reverse mortgage and choose from several payment options that include: lump sum payout, monthly payments or line of credit. In theory, you could elect to have monthly payments sent to you that are equal or greater than the amount of the Social Security payments that you'd be receiving were you to apply for benefits right away.
If you defer Social Security benefits using a reverse mortgage, you stand to actually make some gains, too. For example, deferred benefits can increase by as much as 7-8% per year. Whereas a reverse mortgage interest rate typically hovers between 4-5%.
It's a unique way to tap into your retirement income early without having to take out your benefits right away. Of course, like any other big financial decision, you should always seek advice from industry experts.
Your financial advisor is the best place to start here. These professionals can provide more scope and depth on what your options consist of. You may find that a reverse mortgage is a good solution for your needs. If you take the time to fully research all of your available options, you can make an educated decision that best benefits your retirement plan and goals.
It's nice to know that if need be, you do have the option to access that hard earned equity you've accrued in your home over the years should the need arise.