HECM Strategies Can Make Your Retirement Dollars Work Harder

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 70^1/2 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. http://rightonthemoneyshow.com/hecm-strategies-can-make-your-retirement-dollar-work-harder-don-graves/  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.