5 ways to maximize your retirement income now, according to experts
While inflation has cooled compared to recent highs, there have been upticks in the inflation rate over the last few months, and, as a result, the cost of living remains elevated. That’s making it harder for the seniors who are on fixed incomes to cover all the costs they face in retirement. The recent issues with stock market volatility aren’t helping much, either. And, those are hardly the only money-related issues seniors are facing right now. Rising costs in healthcare, housing and other sectors are also making it harder for retirees to make ends meet financially. And, 84% of retirees want to better protect their savings from eroding due to inflation, according to Schroders 2025 U.S. Retirement Survey. Amid this challenging environment, many retirees are looking for ways to increase their income and free up room in their budget so they can enjoy the retirement they deserve. So, what can you do to achieve this? 5 ways to maximize your retirement income now, according to experts Here are five effective ways experts say you can maximize your retirement income now. Delaying Social Security to increase monthly payments You can begin taking distributions at age 62, but one of the best ways to maximize your retirement income is to delay receiving your Social Security benefits until after age 70. Each year you wait increases your monthly benefit by about 6% to 8%, and by the time you turn 70, the benefit could be nearly twice what it would have been at 62, according to the IRS. Still, deciding when to start receiving Social Security should be based not only on financial considerations, but also on your health, risk level and future plans, says Vanessa Alanis, CFP and owner of Black Dog Wealth. “A client I worked with was planning on delaying Social Security. However, in her 60s, she was diagnosed with a form of cancer that reduced her life expectancy,” Alanis says. “We updated her plan and decided to start taking Social Security immediately. This change allows her to utilize her benefit and live a richer life now while she can.” Downsize or relocate to reduce housing costs Cutting back on expenses is another great way to add cushion to your monthly budget in retirement, experts say. Downsizing to a smaller home may be an effective way to reduce mortgage, utilities and other expenses. Or, relocating to an area with a lower cost of living is another way to make your money go further. Alanis notes that many of her clients downsize to reduce housing costs, often choosing homes they can pay off in full. “The removal of a mortgage payment can reduce a client’s expenses by thousands of dollars per month,” Alanis says. But before you start packing up your moving boxes, make sure you run the numbers to make sure it works for you. And, don’t forget to include surprise expenses like closing costs, moving expenses, HOA fees, property taxes and repairs or upgrades to the new home. Use annuities or reverse mortgages for guaranteed income With an annuity, you pay an insurance company a lump sum and receive reliable monthly payments in return, making it a good option to consider if you’re concerned about outliving your money. But while annuities can arm you with an income stream in retirement, be aware that once your money is locked in, you have limited access to it and your funds may not earn as much as other investment options like stocks and mutual funds. A reverse mortgage is another good option to consider, as this type of borrowing tool lets you tap into your home equity without having to sell your home. You can use the funds to help meet everyday expenses and continue to live in your home. The loan is repaid when you sell the house, move out or die. That will leave less for your heirs, but the benefits could be worth the tradeoff for some seniors. “Reverse mortgages are highly regulated and very safe today,” says Jeff Lichtenstein, CEO and broker at Echo Fine Properties. Retirees also need to consider the emotional side, Lichtenstein says, since many want to stay in their homes and must weigh that against the true cost of relocating. Take advantage of catch-up contributions or part-time work If you are 50 or older and haven’t saved as much as you’d like in an individual retirement account (IRA) or 401(k), you may be able to deposit more than the normal limit allows by making catch-up contributions. This option can help you course-correct and get your retirement savings back on track. The guidelines for 2025 state that you can put in an extra $1,000 to an IRA and an extra $7,500 to a 401(k), 403(b) or 457(b). For those ages 60 to 63, the limit increases to $11,250 if your plan allows for it, but once you turn 64, it returns to $7,500. “Catch-up contributions are underutilized,” says Dominick Leuzzi, an investment advisor and financial planner at Walsh & Nicholson Financial Group. “A 60-year-old couple I worked with each maxed their 401(k) catch-up ($7,500 a year each) plus IRA catch-up ($1,000 a year each), and added part-time consulting income. Over seven years, they increased retirement savings by over $250k, which — when invested — gave them the confidence to retire on schedule.” Taking on part-time work can also inject revenue into your budget, though you’ll give up some of your free time. Alanis points to a client who started a part-time consulting business for extra income. “Not only did he end up exceeding his financial goal of securing his retirement, but his life also became fuller and more enjoyable,” Alanis says. Review tax-efficient withdrawal strategies Another way to improve your bottom line in retirement is to strategize how and when you withdraw money from your different accounts. One approach is to withdraw from each account annually based on its share of your total savings. Another is to tap taxable accounts first if you have large long-term gains and may qualify for the 0% capital-gains rate. “It can be difficult to
What disqualifies you from getting a reverse mortgage?
For many older Americans, their home is more than a place to live. It’s also their biggest financial asset. And, for those who need access to more income in retirement, tapping into that wealth can be a smart move, whether they need help covering medical bills, supplementing Social Security or simply want more financial peace of mind while living on a fixed income. That’s part of why reverse mortgages, which allow homeowners 62 and older to convert home equity into cash without monthly mortgage payments, have become a popular choice among retirees. But while reverse mortgages are designed to provide an accessible borrowing option to aging households, they aren’t available to everyone. In fact, a surprising number of applicants don’t qualify. Part of the issue is that the reverse mortgage application process has grown increasingly rigorous over the last decade, so there are significant hurdles borrowers may face when applying. For example, borrowers now face mandatory financial assessments that are required to protect both lenders and borrowers from defaults, which can make it harder to qualify. Understanding those hurdles is critical if you’re considering a reverse mortgage in retirement. You don’t want to begin the process only to discover that your home or finances won’t make the cut. So, what exactly can disqualify you from securing one of these loans, and what should you know before applying? What disqualifies you from getting a reverse mortgage? While reverse mortgages can be a valuable tool, lenders must follow strict rules to protect both borrowers and the financial institutions backing the loans. These requirements mean that not every homeowner qualifies. Here are some of the most common disqualifying factors: Not meeting the age requirements While you must be at least 62 to qualify for a government-insured Home Equity Conversion Mortgage (HECM), the age requirement becomes tricky when spouses are involved. If your spouse is younger than 62, they can be included as a non-borrowing spouse, but this significantly reduces the loan amount you’ll receive since calculations are based on the younger spouse’s age. Some proprietary reverse mortgages do allow borrowers as young as 55, though, depending on the lender and state regulations. However, these private loans typically come with stricter credit and income requirements that can disqualify borrowers who would otherwise qualify for an HECM. The age factor also affects your borrowing power throughout the life of the loan. Leaving your home for extended periods, including long-term medical care, can trigger loan repayment requirements, making reverse mortgages unsuitable for seniors who may need nursing home care in the near future. Insufficient home equity and property value issues You need at least 50% equity in your home to qualify, and your reverse mortgage proceeds must be sufficient to pay off any existing mortgage balance. This requirement trips up homeowners who’ve recently refinanced or taken out home equity loans, as well as those in areas where property values have declined. If your reverse mortgage can’t cover your existing mortgage balance entirely, you’ll need to bring cash to closing, a requirement that defeats the purpose for many cash-strapped seniors. Property type restrictions also eliminate many potential borrowers. After all, reverse mortgages only work for single-family homes, FHA-approved condos or two- to four-unit properties where you live in one unit. Vacation homes, investment properties and certain types of manufactured homes don’t qualify, regardless of their value or your equity position. Missing the mark on property condition and maintenance standards Your home must meet FHA property standards, and major structural issues, health hazards or neglected maintenance must be addressed before approval. This requirement often surprises longtime homeowners who have deferred maintenance or live in older properties. An FHA appraisal will identify required repairs, and unlike traditional mortgages, where cosmetic issues might slide, reverse mortgage standards are particularly strict about safety and habitability. Certain zoning restrictions can also disqualify properties, and unique or overly large properties may not meet HUD guidelines. Even seemingly minor issues like using your home for short-term rentals can disqualify you, as these are considered commercial uses that violate the primary residence requirement. Issues with the credit and financial assessment While reverse mortgages are more forgiving than traditional loans when it comes to credit scores, severe financial events like unresolved bankruptcies, recent foreclosures or federal debt delinquencies can disqualify you. You cannot owe any federal debt, such as federal income taxes or federal student loans, though you can use reverse mortgage proceeds to pay off these debts. Lenders must also verify your ability to pay ongoing property-related expenses like taxes, insurance and maintenance. If your income or assets aren’t sufficient to cover these costs, you’ll be denied, even if you have substantial home equity. This financial assessment has become increasingly strict, too, with specific residual income requirements that vary by household size and geographic region. Not meeting counseling and documentation requirements You must complete a counseling session with a HUD-approved reverse mortgage counseling agency, and failure to attend this mandatory session results in automatic disqualification. This isn’t just a formality, either. During this session, counselors evaluate whether you understand the loan terms and may recommend against proceeding if they believe a reverse mortgage isn’t in your best interest. The bottom line Reverse mortgages can be a powerful financial tool for older homeowners looking to unlock equity without taking on new monthly payments. Qualifying isn’t as simple as owning a home and being retired, though. Age restrictions, property requirements, financial obligations and credit history all play a role in determining whether you’re eligible. If you’re thinking about applying, it can help to get a clear picture of your financial health and your home’s condition before meeting with a lender. Addressing potential issues in advance — such as paying down debt, catching up on taxes or handling necessary repairs — can make the process smoother and improve your chances of approval. By Angelica Leicht
Are reverse mortgages a safe option for seniors? Here’s what to know.
The realities of retirement may look a lot different now than you once imagined. While Social Security, pensions and investment withdrawals remain the backbone of retirement funding, issues with rising living costs, longer life expectancies and elevated healthcare expenses have put a lot of weight on the average retiree’s finances. That, in turn, has led many older Americans to search for ways to boost their incomes, and some senior homeowners are now turning to their most valuable asset — their homes — for financial support. There are a few ways to do that, but one unique that’s option geared directly toward seniors is a reverse mortgage. These specialized loans, which are reserved for those ages 62 and older, allow seniors to convert part of their home equity into cash. And, the appeal is clear: There are no monthly payments to factor in, and this type of borrowing comes with flexible disbursement options and the ability to age in place. Plus, home values are still elevated in many parts of the country, so this may be an opportune time to tap into equity. But like most financial tools, there are also complexities and potential pitfalls that come with taking out a reverse mortgage. So, if you’ve been trying to determine whether a reverse mortgage would be safe to pursue, there are a few things you should know before deciding. Are reverse mortgages a safe option for seniors? Here’s what you need to know about the safety of reverse mortgages in today’s unique economic environment: Reverse mortgages are federally regulated, but they’re not foolproof Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA). This means borrowers have certain protections, such as never owing more than the home’s value when it’s sold. Lenders also must follow strict guidelines for counseling and disclosures. Still, regulation doesn’t eliminate all risks related to this type of borrowing. Misunderstanding the fine print, failing to pay property taxes and insurance while you’re still in the home or living outside the home for too long can trigger repayment and even foreclosure. The safety depends on your long-term housing plans Reverse mortgages work best for seniors who plan to stay in their homes for the foreseeable future. If you think you might move within a few years, whether to downsize, relocate or transition to assisted living, the upfront costs and loan fees may outweigh the benefits. And, the safety of the loan decreases if it’s used short-term, because you could end up with less equity to put toward your next housing arrangement. You must still maintain the property and pay certain costs A common misconception is that a reverse mortgage eliminates all housing-related expenses. In reality, borrowers remain responsible for property taxes, homeowners insurance, HOA dues (if applicable) and maintenance. Falling behind on these obligations can lead to default. For seniors on fixed incomes, these ongoing costs should be carefully factored into the decision to ensure the loan remains safe and sustainable over time. Interest and fees can eat into your equity Unlike traditional mortgages, where your balance decreases as you make payments, a reverse mortgage balance grows over time because interest and fees are added to the loan. While you won’t owe the money until you leave the home, the accumulating balance can significantly reduce the amount of equity left for your heirs, or for you if you eventually sell. This makes reverse mortgages less safe for seniors who want to preserve their home as an inheritance. Scams and bad advice are still out there Even with federal regulation, seniors remain a target for scams involving reverse mortgages. Some schemes involve contractors pushing unnecessary home repairs financed by a reverse mortgage, while others exploit seniors through fraudulent loan offers. Working only with HUD-approved and trustworthy lenders, attending mandatory counseling and involving a trusted family member or advisor in the process can add an extra layer of protection. The bottom line A reverse mortgage can be a safe and effective tool for certain seniors. especially those with significant home equity, a desire to stay put and a need for additional retirement income. But safety isn’t guaranteed, so you’ll want to make sure you understand the obligations, plan for the long term, and work with reputable lenders if you take this route. If you’re considering one, take the time to weigh it against other options, such as downsizing, taking out a home equity loan or tapping investment accounts. A conversation with a financial advisor who understands your broader retirement picture can help ensure your decision supports both your immediate needs and your future security. By Angelica Leicht
Can you outlive a reverse mortgage?
Americans are living longer, and for many retirees, that’s a double-edged sword. While more years can mean more time with family and friends, and the freedom to enjoy retirement, it also means stretching retirement savings further than expected. That’s one reason reverse mortgages are getting a second look from homeowners in their 60s and 70s: They offer a way to turn home equity into cash without monthly payments. And, with millions of seniors sitting on substantial home equity right now, reverse mortgages could be an appealing solution to consider. Reverse mortgages can be far more nuanced than many borrowers initially understand, though, and the reality is that the amount of home equity you can tap into is also finite. So, what happens if you live too long after taking out a reverse mortgage? Can your loan run out and could the lender eventually take your home if you outlive the terms? These are important questions, especially as retirement spans stretch past 20 or even 30 years. So, if you’re thinking about tapping into your home equity this way, it’s important to understand whether you can truly outlive a reverse mortgage. Can you outlive a reverse mortgage? If you’re concerned about the possibility of outliving a reverse mortgage loan, make sure you understand the following before signing on the dotted line: Reverse mortgages don’t expire while you live in the home. Unlike many other financial products, a reverse mortgage isn’t limited to a set number of years. As long as you continue to live in the home as your primary residence and meet basic obligations, like paying property taxes and insurance, the loan remains active. That means your loan will not need to be repaid during that time, whether you live another five years or another 25. The loan only comes due when you permanently leave the home, whether because of death, moving out, or transitioning to long-term care. So, in a very real sense, no, you can’t outlive the loan while still living in your home. You can, however, outlive your equity. While you can’t technically outlive the reverse mortgage itself, you can outlive the equity in your home. Over time, the loan balance grows as you draw funds and the interest accrues. If you live long enough, that balance can eventually exceed the value of your home, especially if home prices stagnate or decline. That means when the loan ends, there may be little or no equity left for your heirs, or for you to access later in life. This is particularly important for borrowers who choose a lump sum or large upfront withdrawal, which can accelerate how quickly the equity is depleted. In other words, living a long time doesn’t jeopardize your ability to stay in your home. It does, however, impact how much wealth you’ll have to pass on, or whether you’ll have backup options if your needs change. Monthly payouts or credit lines can help your loan last longer. How you structure your reverse mortgage matters if you want to avoid outliving your loan proceeds. Borrowers who opt for fixed-rate, lump-sum payments tend to use up their available funds faster. In contrast, a tenure payment, which provides guaranteed monthly income for as long as you live in the home, or a line of credit, which grows over time, can make the loan more sustainable over a long lifespan. If longevity is a concern, and it often is, a reverse mortgage set up for steady payouts or flexible access over time may be a better fit than one that provides a one-time windfall. In this case, “outliving” the usefulness of the reverse mortgage is less likely. The loan ends when you leave the home, but protections are in place. While you can’t outlive a reverse mortgage, your loan doesn’t last forever. When the last borrower or eligible non-borrowing spouse permanently leaves the home, the loan becomes due. That’s when the repayment phase kicks in, usually through the sale of the home by heirs or the estate. But even if your loan balance exceeds your home’s value at that time, you or your estate won’t owe the difference. Reverse mortgages are non-recourse loans, meaning you can never owe more than the home is worth at sale. That protection becomes especially important for borrowers who live well into their 90s or beyond. The bottom line You can’t outlive a reverse mortgage in the traditional sense. There’s no expiration date on the loan as long as you remain in your home and meet the basic obligations. But you can outlive your home equity if the loan balance grows faster than your home appreciates. If you’re concerned about longevity, make sure to weigh the long-term implications before tapping into your home equity — and only consider payment structures that match your future needs. Angelica Leicht
Reverse mortgages: Misunderstood, but a lifeline for aging in place
When most people hear the term reverse mortgage, they cringe. Stories of predatory lending practices, high fees, or children losing their inheritance have clouded the public’s perception. But the reality is more nuanced—and far more positive—than many realize. For older homeowners, especially those facing rising healthcare costs and wanting to stay in their homes, a Home Equity Conversion Mortgage (HECM) can be a smart, strategic financial lifeline. What Is a HECM? A Home Equity Conversion Mortgage is the most common type of reverse mortgage and is federally insured by the FHA. It’s available to homeowners aged 62 or older and allows them to convert a portion of their home equity into cash—without having to sell or move. Unlike a traditional mortgage, a HECM pays the homeowner. You can receive the funds as a lump sum, a line of credit, or monthly payments, and you don’t need to repay the loan as long as you live in the home and keep up with property taxes, insurance, and maintenance. Why the Bad Reputation? The stigma surrounding reverse mortgages often stems from: When a Reverse Mortgage Makes Sense HECMs aren’t for everyone—but they can be incredibly useful in the right situation. One of the most overlooked benefits? Funding in-home care. As people live longer, the cost of aging—especially in-home caregivers, medical equipment, or home modifications—continues to rise. For seniors who are “house-rich but cash-poor,” tapping into their home equity can provide much-needed funds to: These choices can dramatically improve both quality of life and peace of mind. Protecting the Borrower and Their HeirsModern HECMs have added safeguards. For example: A Tool—Not a Trap A reverse mortgage shouldn’t be rushed into. It’s a long-term financial decision best made with input from family, a trusted financial advisor, and a HUD-approved reverse mortgage counselor (which is now required). But dismissing the idea entirely can leave money on the table—money that could make aging in place safer, more comfortable, and more independent. By Anna Kussmaul
The Deepest and Most Emotional Concern
It’s no secret that reverse mortgages have had a rough start. I believe the ultimate reason for this is not that reverse mortgages were fundamentally different in the past, and that the HECM of today is “not your grandfather’s reverse mortgage”. Clearly, there have been meaningful updates to the HECM’s features and protections over the years, but it is still conceptually the same thing. And it’s still the most underappreciated financial tool I’ve seen in 19 years of financial planning, so selling it like it’s different now than in years past – a strategy I see a lot in the industry – is not working. I believe the problem is that thinking of debt as a useful tool, which it very much can be, will always challenge people’s intuitions. This is the fight the reverse mortgage industry needs to address. Here’s an example that illustrates what I mean. Imagine a 75-year-old couple planning to celebrate their 50th anniversary with kids and grandkids. They plan a big and memorable trip, and they budget $50,000. They distribute the $50,000 they need from a $500,000 brokerage account to cover the cost. That account is now $450,000. Assuming this trip is affordable for them, does anyone fault the couple for taking this trip to celebrate the legacy they built? I sure hope not. If that’s not a worthy use of investments at that point in life, what is? They take the trip, and everyone has a fantastic time. Over the next decade, the entire family mentions it often with fond memories. They have no regrets. Let’s say over that same decade, the remaining $450k brokerage account doubled (this is 7.2% annualized, which is not unreasonable) to $900,000. Indisputably, they are less wealthy 10 years later to the tune of $100,000, for having gone on the trip. If they’d left the $50,000 in the account instead of celebrating their anniversary, the account would have become worth $1M. Is this clearly true? Yes. Should we always avoid spending money for this reason? Of course not. It’s just something we must consider when we spend money. And this concept is always relevant, not just in retirement. To Spend or Not to Spend… Here’s where it gets interesting. What if they’d borrowed the money instead? Whether it’s with a reverse mortgage or some other loan tool isn’t relevant here – it’s the “loan” that causes our intuitions to scream. In this alternate scenario, they borrow the money and never make a payment on the balance, allowing it to increase. Most loans don’t work this way, but such a thing is possible with a reverse mortgage. And what if that balance over those same 10 years accrues at 7.2% (also reasonable) from $50,000 to $100,000? This $100,000 debt balance makes us all squirm. It just feels different than the first scenario where the trip was paid for by selling the assets, right? It’s debt! There’s interest! The bank took $100,000 of my equity even though I only borrowed $50,000. They’re stealing my home equity! But fundamentally and importantly, from a net wealth perspective, it isn’t different than selling the assets and giving up the future growth. The balance sheet doesn’t care. Yes, by borrowing the money 10 years ago, they now have a $100,000 liability. However, they kept their investments intact, which are $100,000 larger than if they’d sold them 10 years ago. This concept is so fundamental in grasping the value of reverse mortgages that I refer to it as “The Most Important Thing”. On a side note, notice that nothing taxable has happened by borrowing against an asset, whereas selling investments often comes with tax consequences. This concept is precisely why almost all permanent life insurance policies have loan features built right into them. It’s a brilliantly simple way to save significant money on taxes. Let’s get back to our couple who celebrated their 50th wedding anniversary. Let’s examine their financial situation ten years later at age 85. Their $1M home has a reverse mortgage with a $100,000 balance. Is this a problem? An emotional one, probably. Most people would feel like they’d made a terrible mistake by borrowing $50,000 when ten years later they owe $100,000. But as strong as those emotions are likely to be, the problem is only emotional. They have $900,000 of home equity. And the investment portfolio is $100,000 larger (plus the tax savings inherent in this strategy) because they didn’t touch it for the anniversary bash a decade ago. The strategy of borrowing against assets rather than selling them is one that wealthy families and businesses have been using for hundreds of years. Their planners and accountants understand this basic concept and employ it regularly. And, with no small effort from well-meaning financiers, actuaries, and accountants, it’s been made readily available for the masses through reverse mortgages, and we tend to look down our noses at it like it’s somehow beneath us because it’s “debt”. So, in my experience, the strongest headwind HECMs face is the public’s misunderstanding of this fundamental issue. Debt, like fire, is a powerful tool. Yes, it can be destructive if not understood and respected, but it can also add tremendous benefits to our lives. In fact, nearly all the trillions of dollars in wealth that exists as home equity would not be possible without the use of debt somewhere along the way. That’s strong evidence that debt can be, and quite often is, used constructively. In a nutshell, a HECM simply makes home equity liquid. Yes, there’s interest involved, but that’s fundamentally the same thing as selling portions of investments and missing out on the future growth. Again, your balance sheet doesn’t care. It’s how money works and has worked nearly since its inception. We must address this more competently and more regularly. Once financial planners and the public become comfortable with this concept, the HECM then sells itself. It makes an illiquid asset (equity in your residence) liquid, and when it is seen this
3 ways to avoid dipping into Social Security early
The following strategies could help you avoid the early Social Security filing trap. For many Americans, Social Security is a financial lifeline during retirement, but it’s also one that pays out higher amounts if you can wait longer to claim it. Yet despite this built-in incentive, a surprising number of people still file early. According to recent data, more Americans are now claiming Social Security benefits at age 62, the earliest possible age, a decision that can lock in significantly smaller monthly checks for life. Case in point? Your monthly payments increase by about 8% for every year you delay benefits past your full retirement age until age 70. That type of guaranteed return is hard to beat, especially in today’s market, so why do people claim their Social Security benefits early? In many cases, it’s out of necessity. Things like job loss, rising living costs or unexpected emergencies can push retirees-to-be into relying on Social Security sooner than they’d planned, especially if they’re behind on their retirement savings and investing goals. And in today’s uncertain economic climate, with inflation remaining sticky and housing costs still high, those types of pressures aren’t letting up. However, there are ways you can reduce the chances of needing to dip into Social Security earlier than planned. By using these tools, you can buy yourself more time and lock in a larger monthly benefit down the road. Invest in the right annuity One of the most effective ways to bridge the income gap before claiming Social Security is investing in an immediate or deferred income annuity. Think of an annuity as creating your own personal pension. When buying one, you make either a lump sum payment or series of payments to an insurance company, and in return, they guarantee you monthly income for life or a specified period. The beauty of this strategy lies in timing and tax efficiency. If you purchase a deferred annuity in your early 60s, you can set it to begin payments at age 65 or 67, creating a bridge until you’re ready to claim Social Security at 70. This approach is particularly powerful because annuity payments are partially tax-free, as you’re getting back some of your own principal. And, delaying Social Security means your eventual benefits will be significantly higher and potentially push you into a lower tax bracket overall. Note, though, that annuities can differ vastly from one option to the next, so it’s important to do your research and choose the type and payout structure that aligns with your timeline, risk tolerance and other retirement income sources. Working with a financial advisor or annuity expert who understands the nuances of annuity products can help you find the right option to support your Social Security strategy. Supplement your income with a reverse mortgage loan If you’re a homeowner aged 62 or older who has a substantial amount of home equity, a reverse mortgage could give you the financial breathing room you need to delay tapping your Social Security benefits. With a reverse mortgage, you borrow against the equity you’ve built in your home and receive the funds as a lump sum, monthly payments, a line of credit or a combination of these options. Taking out a line of credit via a reverse mortgage is often most strategic because unused credit actually grows over time, giving you an expanding financial safety net. And, unlike traditional home equity loans, your reverse mortgage loan proceeds don’t have to be repaid until you sell the home, move out or die. There are also federal protections in place so you’ll never owe more than the home is worth, even if the market shifts. So, when used strategically, a reverse mortgage can be an efficient way to lock down a retirement income source, especially if your home has appreciated in value and you want to stay in place. That said, reverse mortgages aren’t the right solution for everyone. They come with fees, reduce your home equity and can complicate things for your heirs. But for retirees who want to stay in their homes and avoid filing for Social Security before they’re eligible for the maximum benefits, they’re worth considering, particularly as home prices stay high or continue to climb in many markets. Maximize contributions to your tax-advantaged retirement accounts If you’re 50 or older, you can make catch-up contributions that significantly boost your retirement savings. The strategy involves front-loading these accounts in your late 50s and early 60s, and then using systematic withdrawals to fund your lifestyle while your Social Security benefits grow. While maximizing contributions to 401(k)s, IRAs, and health savings accounts (HSAs) in your final working years requires advanced planning, it can be incredibly powerful, as you can use these funds strategically in early retirement. For example, you might withdraw from traditional IRAs and 401(k)s first while paying ordinary income tax and then transition to Roth accounts before finally claiming maximized Social Security benefits. This creates a tax-efficient withdrawal sequence that can extend your money significantly. For 2025, you can contribute up to $31,000 to a 401(k) and $8,000 to an IRA when including catch-up contributions at or after age 50. HSAs are particularly valuable because they’re triple tax-advantaged and can be used for any purpose after age 65, though it’s worth noting that non-medical withdrawals are taxed as ordinary income. The bottom line Delaying Social Security isn’t always easy, and while it may be tempting to claim Social Security as soon as you’re eligible, especially when money is tight or retirement feels just out of reach, doing so often means settling for smaller monthly checks that can stretch thin over time. Fortunately, with some smart planning, you can give yourself the flexibility to wait, whether that means investing in the right annuity, tapping into home equity through a reverse mortgage or focusing heavily on your tax-advantaged retirement accounts. By utilizing one or more of these strategies, you’ll be in a stronger position to make the most of your benefits and your retirement. Angelica Leicht
4 reverse mortgage questions seniors should be asking themselves now.
News last week that inflation rose in June, following a previous increase in May, was likely not the development millions of Americans were hoping for. In recent years, inflation has spiked the cost of numerous items, making it more difficult to make ends meet. This has been an even greater problem for seniors, many of whom are reliant upon limited funds to pay their bills. With Social Security and retirement funds finite, then, many of these seniors may be contemplating alternative funding sources right now. A reverse mortgage may be at the top of their list. With a reverse mortgage, homeowners age 62 and older can receive payments from their accumulated home equity. Either via a lump sum or monthly payments drawn from the home, funds here will only need to be repaid in the event of a sale of the home or if the homeowner dies. So it’s naturally tempting to explore this unique funding source in the economic climate of 2025. Before getting started now, though, seniors would be well-served by preparing the answers to a series of important reverse mortgage questions. Below, we’ll analyze four timely questions worth considering. 4 reverse mortgage questions seniors should be asking themselves now Here are four reverse mortgage questions seniors may want to start thinking about the answers to right now: Is it the smartest way to borrow home equity right now? There are myriad ways to borrow home equity now, ranging from reverse mortgages to home equity loans to home equity lines of credit (HELOCs). Some homeowners may even benefit from a cash-out refinance. And with interest rates on home equity loans and HELOCs much lower than personal loans and credit cards, now may be the ideal time to borrow equity that way instead of using a reverse mortgage. Start, then, by exploring all of your potential home equity borrowing options to determine if a reverse mortgage is truly the smartest way to borrow your hard-earned equity now. Can I adequately get by with Social Security and other funds? Concerns over recent Social Security overpayments, clawbacks and insolvency are all pertinent right now and it’s understandable if homeowners feel like they need an additional funding source, of which a reverse mortgage can easily provide. But your home is likely your most prized financial asset and borrowing from it should always be done judiciously, especially now. So, ask yourself if you can adequately get by with Social Security and your other retirement funds instead. If you can’t, a reverse mortgage makes sense. But if you’re just looking for an alternative income stream that you don’t truly need, it may not. What are my financial goals for my beneficiaries? If you were planning to pass your paid-off home to your beneficiaries after your death, then a reverse mortgage can alter those plans. Since funds here will need to be repaid once the homeowner has died, there may be little or nothing left to pass on to beneficiaries, many of whom may be depending on that money in today’s inflationary and high-rate climate. Re-evaluate your financial goals for your beneficiaries, then, before pursuing your reverse mortgage options. You may find that there are ways to protect a portion of your assets for your beneficiaries while still securing a new income stream for yourself simultaneously. Which payment type makes the most sense? If you ultimately do settle on a reverse mortgage as your optimal recourse now, then you’ll need to determine how you want to get paid. With a reverse mortgage, you can receive funds in a lump sum, via monthly payments and potentially even as a revolving credit line similar to a credit card or HELOC. Which payment strategy makes the most sense for your needs and goals? This question will be specific to the homeowner in question, but it’s worth contemplating the answer now so you’re better prepared when it comes time to complete the formal paperwork. The bottom line A reverse mortgage could be the precise financial tool seniors require in today’s unpredictable but still difficult financial landscape. By taking the time to think through the answers to these four questions, these seniors can better determine if this is truly the right move for their financial situation now or if they’re better served by exploring alternatives or, in some instances, keeping their current financial strategy the same. By Matt Richardson
Why a reverse mortgage makes sense for seniors this July
A reverse mortgage isn’t available for every homeowner. Typically, you’ll need to be age 62 or older to qualify (55 in some situations), leaving this option available mostly for senior homeowners. But if you meet the age requirements and some other criteria, this unique funding source could be worth exploring, particularly in the unique economic landscape of July 2025. With a reverse mortgage, lenders will pay homeowners out of their accumulated home equity, either in a lump sum or via monthly payments. This money will only need to be repaid in the event of the death of the homeowner or if the home in question is sold. Otherwise, homeowners can comfortably rely on these payments being made back to them, providing a much-needed financial cushion right now. And while the benefits of a reverse mortgage can often be timeless and applicable in a variety of scenarios, there are some timely reasons why it can be particularly beneficial for seniors this July. Below, we’ll examine three of those reasons. Why a reverse mortgage makes sense for seniors this July Not sure if a reverse mortgage could be the right move for your finances this July? Here’s why it could be: It can fill in the gaps left by Social Security Whether you’re currently dealing with issues related to Social Security overpayments and clawbacks or are simply concerned about the system running out of funding in the future, a reverse mortgage can adequately fill the gaps left by Social Security each month. This additional monthly income stream can be the difference between covering all of your bills and expenses or not. With a reverse mortgage, you won’t need to cut as many corners or try to squeeze as much as you can out of retirement funds and Social Security. And with inflation rising again in June and rates on loans and borrowing products remaining elevated, an additional income stream is particularly helpful to have this July. It won’t require monthly repayments in today’s high-rate climate Unlike a home equity loan, which also uses the home as a funding source, homeowners won’t be responsible for making monthly repayments right after the funds are disbursed. They won’t be required to make repayments at all, as equity taken with a reverse mortgage will simply be replenished upon the sale of the home. This is a major advantage this July, as it eliminates the stress (and calculations) required when calculating interest rates and repayments on items like home equity loans and home equity lines of credit (HELOCs). Qualifying may be easier compared to alternative funding sources The average home equity amount sits over $300,000 right now, and if you’re a senior living in a paid-off home, you may find yourself with even more money to borrow from. Qualifying, then, could be easier compared to trying to secure a six-figure credit card line or a $100,000 personal loan, for example. Lenders can easily determine your home’s worth and, thus, the amount you can secure with a reverse mortgage. And a simple qualification is always beneficial, but especially this July when the need for additional funds, thanks to inflation, interest rates and stock market uncertainty, is elevated. The bottom line A reverse mortgage isn’t a one-size-fits-all solution for seniors, but the benefits of pursuing one can be broadly applicable in the economic climate of July 2025. With the ability to fill in gaps left over from Social Security payments, no concerns over repayments (and interest rates) in today’s elevated rate climate and relative ease of qualification compared to alternative funding sources, a reverse mortgage could be the solution to your financial problems both this month and in the future.
Wade Pfau: Four Ways To Beat Sequence Risk
Bumpy markets are no fun for anyone, but for clients about to retire or who are recently retired, volatility can be downright terrifying. That’s because market drops right before or early in someone’s retirement make it difficult for them to make up the returns later—a phenomenon called “sequence of returns” risk. “We’re really vulnerable to market returns around the retirement date—in the years leading up to retirement and then especially in the early years of retirement,” said Wade Pfau, a Dallas-based retirement specialist who spoke about sequence risk strategies in a webinar on Wednesday. “It’s not just the average return over your retirement that’s going to determine the success or failure of the plan. It’s the order that the returns come,” he said. “Bad returns early on balanced by good returns later on can’t help you. If you get good returns early on, balanced by bad returns later on, you’re smooth sailing.” One of the problems for these investors is that they want to avoid selling assets at a loss, yet retirees taking distributions have to sell assets in every market. There are three aspects of sequence risk particularly difficult to address, he said. The first is that there’s no way to predict when those poor returns will come. The second is that sequence risk can’t be managed through diversification—it needs its own intentional strategy. And the third is that simple withdrawal strategies—say, taking 5% every year for the historical average return—will fail at some point. “Even if the average return is right over a long period, markets are volatile, and that volatility is going to have an impact on you,” he said. Pfau suggested advisors consider four very different techniques—all of which can accomplish the goal of protecting clients from sequence risk. One is to spend conservatively. The second is to use a flexible spending strategy. The third is to reduce portfolio volatility. And the fourth is to use a buffer asset during periods of poor returns. Spending ConservativelyWhile penny-pinching frugality is no retiree’s idea of a good time, Pfau was adamant that small adjustments can do the trick here. He said that to do this efficiently, retirees can delay Social Security until they are age 70 and build a bridge to cover their spending between the day they retire and the day they start collecting. He shared the hypothetical case of a single client who wants to retire at age 62. The client has $866,000 in retirement assets and an annual spending goal of $60,000, adjusted for inflation. The client’s two income sources would be the retirement assets and Social Security. By taking the Social Security benefit at age 62, this client gets $21,000 a year, and is also pulling $39,000 a year from investments to meet spending goals (a 4.5% withdrawal rate). If the client delays Social Security to 70, they’d get $37,200 and would have to take just $22,800 from investments, a 3.89% withdrawal rate. The trick would be getting through those eight years between the date of retirement at 62 and the date of taking Social Security benefits at 70—and doing so in a way that sidesteps sequence risk. “Their solution’s not going to be to take $60,000 a year straight up from their total return diversified investment portfolio, which would amplify sequence risk,” Pfau said. Instead, the client could find ways around the risk by using something like Treasury Inflation-Protected Securities (TIPS), which are U.S. Treasury bonds that provide inflation adjustments. An eight-year bond ladder would give the client $37,000 per year (adjusted for inflation) to match the missing Social Security benefit until it kicks in when the client turns 70. The result is a portfolio with greater longevity. If the client takes Social Security at age 62 and pulls from his or her investment portfolio to make up the $60,000 over eight years, this would deplete the client’s assets in 19, leaving the client with just the $21,000 from Social Security to live on after that. But when the Social Security benefit is delayed, the client’s assets would deplete after 25 years, and they’d have a much larger benefit at the end. “They still run out their portfolio, but it’s not the same. Not only does the portfolio last seven years longer, but Social Security is going to give them $37,200 a year plus inflation,” Pfau said. “They still get a much higher spending amount for the remainder of their retirement.” Flexible Spending StrategiesThe second approach is the flexible spending strategy. Here, retirees spend more in market upturns and less in market downturns. That way they can avoid selling as many assets at a loss. “This is the complete opposite of the 4% rule idea, which is just about how much you spend in the initial year, and then you adjust that amount for inflation,” Pfau said. That amount is a fixed dollar amount every year (say, $40,000 every year if you have started with a $1 million portfolio), plus the inflation adjustment. Instead, what if a client spent 6% (or 8%) of whatever is in their portfolio for each year, whether the portfolio had gone up or down? “We’re going to call that the constant percentage strategy. And that’s the exact opposite of the constant amount strategy. You spend a constant percentage of what’s left, and you don’t worry about what amount that is,” Pfau said. If the markets do well and the portfolio is up, the client can spend more. If markets do poorly, the client is using the same percentage of a smaller pie and spends less. “You never run out of money with a constant percentage strategy, even with a 10% annual distribution rate,” Pfau said. The only problem, he continued, is that spending amounts can vary dramatically, dropping as much as 60% in a very down market. Because of this, Pfau said he doesn’t advocate a pure constant percentage strategy. Instead, he said flexible spending strategies should be a compromise between the extreme of 4% of the