An Easy Way To Increase Retirement Funds
This strategy provides cash-flow during the early years of
retirement while allowing the social security benefit to grow if it has not yet
been claimed, as well as, allows retirement accounts to grow in order to
provide more later in life.
Using home equity instead of drawing social security early,
or drawing more than required from retirement funds, allows individuals to
achieve a number of financial goals, the most important of which is prolonging
the length of time your retirement funds will last.
While using a bank
home equity account might cost less at the beginning of the loan, the payments
and the bank re-qualification requirement often cause unnecessary risk and
regret years later. The FHA Home Equity Conversion account costs more upfront
but has several advantages that make the cost worth it over the years.
An FHA Home Equity Conversion (HECM) account requires no
monthly payments on funds used, and has no re-qualification requirements. The
monthly supplement is guaranteed in the mortgage contract and is backed by the
Federal Housing Administration for as long as those on title live in the home –
even if the equity runs out.
However, the supplement can be increased and set on a
shorter term thus allowing younger retirees to delay social security, reduce
reportable income for tax purposes, prolong the growth period for retirement
funds to grow, and protect retirement portfolios from being drawn down too
early.
