WSJ: Use Reverse Mortgage to Increase After-Tax Wealth

Using proceeds from a reverse mortgage could help retirees strategically maximize the after-tax value of their wealth, according to a recent column in The Wall Street Journal. 

In his column, Wade Pfau — a professor of retirement income at The American College in Bryn Mawr, Penn. — suggests that reverse mortgage proceeds can boost spending without increasing taxable income. 

Comparing reverse mortgage proceeds to those from a Roth IRA, Pfau writes, “Roth distributions can be useful to fill in income needs without entering into a higher tax bracket. Roth distributions do not count as part of taxable income, and they do not count on the income used to determine the taxability of Social Security benefits.”

Though fairly new to the industry, Pfau has championed reverse mortgages in previous articles, noting that financially responsible individuals can improve their retirement sustainability with the loan. 

Read his recent column here

Written by Emily Study

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