When you retire it is more than likely you will be attempting to live on income that is as much as half of what you had while you were working. Even if you have a pension very few employers today offer a cost of living increase that comes anywhere near the actual increase in the cost of living-many companies don’t even offer increases to their retirees. This leaves those who are retired struggling to make ends meet as the cost of even basic necessities such as food, clothing, utilities, insurance, heat and gas go through the roof. This forces many people to continue working into their 70s and even 80s in order to keep a roof over their heads. Others are forced to sell their beloved homes and move in with their children because they can no longer afford the cost of living on their own.
While it may seem feasible for some to return to work if only part-time there is an important issue to remember-the money you make working is taxable and will have an effect on the amount of Social Security income that is taxable. In addition the money from a job is taxable as well. This is where a reverse mortgage is advantageous-the funds you withdraw from your reverse mortgage loan are not taxable! Whether you use the funds to supplement your monthly income, take a trip, pay for a child or grandchild to go to college or make home repairs the funds are still not taxable. You will pay interest on the funds but the interest you pay may indeed be less than you would pay in taxes if you were to obtain the same funds from a taxable source. Even the distributions from a 401K Plan are taxable when you make withdrawals. Continue reading ‘Use a Reverse Mortgage As a Financial Tool’ »