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A recent article in the USA Today newspaper (USA Today Article) sets forth a number of steps an individual working to save for retirement can take to enhance their planning and nest egg.  Several of the steps are either directly or indirectly related to the mortgage an individual may have and/or their overall housing costs.

The first area has to do with getting rid of or reducing the size of a mortgage and the related mortgage payment.  This can enhance the standard of living by decreasing monthly expenses and increasing savings. By downsizing and reducing or eliminating a mortgage payment, if any, the savings can free up funds to allocate towards increasing the investment portfolio.

The second area deals with how a Reverse Mortgage can be utilized in the following ways for retirement planning by anyone over the age of 62.

  1. The use of a reverse mortgage can allow an individual to delay the receipt of retirement income early in retirement.  Often with plans such as Social Security, the longer you can wait to start receiving benefits the larger the benefits will be when they are started later.  The impact of even a two or three year delay can be substantial.
  2. Obtaining a reverse mortgage with a line of credit feature will provide someone with financial flexibility they may need later in life. The primary benefit of this option is that the line of credit can grow a faster rate than many investment portfolios.

A reverse mortgage can be a key component of the retirement plan for any homeowner.