How to Use a Reverse Mortgage to Delay & Increase Monthly Social Security Benefits?

Yes, a reverse mortgage can help delay Social Security benefits by providing a temporary cash flow from your home equity, allowing you to hold off claiming until a later age—potentially boosting your monthly benefit significantly. Since Social Security payments increase the longer you wait (up to age 70), using a standard reverse mortgage as a bridge can fill the income gap, letting your benefits grow while you avoid dipping into savings or other retirement accounts prematurely.

How It Delays Social Security

• • Temporary Income: Take monthly payments, a lump sum, or a line of credit from a reverse mortgage to cover living expenses during the delay period—say, from 62 to 70—without claiming Social Security.
  • Benefit Boost: Each year you delay past full retirement age (e.g., 67) ups your benefit by about 8% until 70. A reverse mortgage funds you while that increase racks up.
  • Tax-Free: The cash is a loan, not income, so it doesn’t affect Social Security taxation or eligibility.

Mechanics

• • Eligibility: You’re 62+, own your home (with enough equity), and it’s your primary residence. Taxes, insurance, and upkeep stay your responsibility.
  • Amount: Depends on your age (older gets more), home value, and rates—enough equity can bridge years.
  • Repayment: No monthly payments; the loan’s settled when you sell, move out, or pass away—via home sale, not Social Security.

Why It Helps

• • Higher Lifetime Income: Delaying from 62 (e.g., $1,500/month) to 70 (e.g., $2,600/month) could add $100,000+ over 20 years—reverse mortgage covers the interim.
  • Preserves Other Assets: Avoids early withdrawals from 401(k)s or savings, letting them grow or stay intact.
  • Flexible Bridge: Adjust payouts to match your delay—say, $1,800/month for 5 years from 65 to 70.

Trade-Offs

• • Equity Cost: The loan grows, shrinking home value—less for heirs or future needs.
  • Short-Term Use: It’s a bridge—once Social Security kicks in, the extra cash stops unless you keep drawing.

Quick Example

• • You’re 65, with a $400,000 paid-off home, full retirement age 67 ($2,000/month), but delaying to 70 ($2,480/month). You need $2,000/month now. A reverse mortgage gives $120,000 over 5 years—$2,000/month—to live on. At 70, you claim $2,480/month for life, not $1,700 at 62—$9,360/year more, while equity covered the gap.

Does It Fit?

• • It’s a fit if you’ve got equity, can delay Social Security, and want bigger benefits later—trading home value for future income.

Reverse mortgages can be a useful financial tool for eligible seniors looking to supplement income, pay for healthcare, or cover living expenses, but they also come with complexities that should be thoroughly understood before proceeding.

Learn more about eligibility requirements for a reverse mortgage, situations where a reverse mortgage is best used, and common myths around reverse mortgage that we debunk with facts