An Overlooked Reverse Mortgage Benefit: Potentially Delay Social Security

Reverse mortgages offer many benefits to senior homeowners. By borrowing against the equity in one’s home, a senior can use this product to pad their retirement income. The loan can be used in any way that the homeowner wishes, and they can remain in their home for the rest of their life if they wish.

When we talk about how to use the supplement to income provided by a reverse mortgage, we typically focus on the more obvious ideas: paying for home upgrades, buying a new car, paying off medical bills, going on a vacation, and so on. But another potential use for a reverse mortgage is to delay collecting social security. Let’s explain how this works.

What are the Benefits of Delaying Social Security?

You have options for when you can start claiming your social security payments. You can start as early as age 62, or wait until as late as age 70.

There is an advantage to delaying, in that you qualify for a higher monthly benefit if you do. You can qualify for the full benefit at age 70. Claiming your benefits earlier than that locks you out of the full benefit size forever.

On its website, the Social Security Administration offers a simple example. They show a chart for an individual’s possible benefits. Say that person qualifies for $1,400 a month if they begin claiming at 62. If they can hold off until they are 70, they can claim $2,480 a month instead.

The exact benefits amount you qualify for is based both on the age at which you start claiming your benefits, and on your work and earnings history. The more you earned during your lifetime, the more you can qualify for.

How Can a Reverse Mortgage Help?

While it is obviously ideal to be able to claim the full benefits amount at age 70, you miss out on the benefits you could have collected for the 8 years prior if you wait.

While a reverse mortgage does not replace those lost benefits in a direct way, it can at least help you offset them. The supplement to your income from the reverse mortgage can tide you over while you wait until you turn 70 to start collecting the maximum monthly benefit from your social security payments.

The reverse mortgage only comes due following a maturity event, such as the sale of the home or the death of the last borrower. So, depending on your scenario, it may not even come due in your lifetime.

Apply for a Reverse Mortgage

If you think that a reverse mortgage is the right fit for your needs, please contact Mike at Blue Square Mortgage at (206) 352-6453. During your consultation, we can answer your questions in detail, and help you figure out whether a reverse mortgage will assist you with achieving your financial goals in retirement. We can work with you anywhere in Washington State or Colorado.