Can you use a reverse mortgage to delay Social Security benefits? The simple and short answer is: yes.
The reason why you would want to consider delaying taking your social security benefits is that if you wait until age 70, you can get a much larger amount. For example, an older American at age 62 would only get about $1,350 per month. But if they hold off on drawing benefits until they are 70, they’d get $2,376, a substantial difference.
But the statistics show that two-thirds of eligible persons actually take out Social Security early and get less as a result. If you have equity in your home, however, you can decide to postpone this to get more of your money in the long run.
So how much equity would you need to draw upon from a reverse mortgage to make it worthwhile?
If you were 62 years of age and had at least $155,000 in available equity, you could take payment terms of 8 years at $1,000 per month. If you were, say, 67, you could take the same $1,000 payment in a three-year term with just $66,000 in equity. Being wise and borrowing only what you need could see you through to a bigger Social Security payday.
According to the most recent statistics, homeowner wealth in American is worth over $5 trillion at the present.
Being able to tap into this equity wisely, and as you need it, can make sense if you are struggling to make ends meet but do not want to draw on your Social Security benefits early.
A tenure payment is something that you can also consider, which is a payment that continues so long as you live in the house. You can convert this payment into a line of credit whenever you see fit, too. If you happen to pass away, what remains is substantial equity in your home that you can still pass on to your heirs.
The same is true if you should need to move to a nursing home – the tenure payment stops, the house is sold and the remaining balance is paid; with substantial equity left at your disposal.
Tenure payments do vary and are based upon the value of the property. For example, a home worth $100,000 could result with a $266/month tenure payment for a 62-year-old. Whereas a home worth $400,000 could result in a tenure payment of $2,582/month for an 87-year-old.
Whatever your situation, it’s nice to know that you do have options with your home equity that you can consider should you want to delay taking Social Security benefits.