Using a Reverse Mortgage as a Bridge to Delaying Social Security

One of the most common retirement dilemmas is deciding when to claim Social Security. If you claim this benefit too early, you’ll lock in a permanently reduced benefit. Wait longer, and your monthly income increases, but only if you can afford the gap years without tapping your savings too aggressively.

For homeowners with substantial home equity, a reverse mortgage can serve as a temporary income bridge. When used strategically, it may allow retirees to delay Social Security and potentially increase their lifetime benefits, without selling their home or draining their investment accounts.

In this article (Skip to...)

• Why delaying Social Security can pay off
• How a reverse mortgage can create income flexibility
• Important reverse mortgage trade-offs
• Who this strategy works best for
• The bottom line

Why delaying Social Security can pay off

Social Security benefits increase the longer you wait to claim, up to age 70. While eligibility begins at 62, claiming before full retirement age permanently reduces your monthly benefit. Waiting beyond full retirement age earns delayed retirement credits of about 8% per year.

For many retirees, the math favors waiting. Higher monthly benefits can provide higher inflation-adjusted income later in life, reduce the risk of outliving assets, and offer greater financial flexibility if one spouse lives significantly longer than expected.

The challenge is cash flow. Delaying benefits means covering living expenses for several years without that Social Security income. That’s where a reverse mortgage can come into play.

How a reverse mortgage can create income flexibility

A Home Equity Conversion Mortgage (HECM) allows homeowners age 62 and older to convert a portion of their home equity into cash without making monthly mortgage payments. The loan balance grows over time and is typically repaid when the borrower moves out, sells the home, or passes away.

Funds from a reverse mortgage can be accessed in several ways, including a lump sum, monthly payments, or a line of credit. For Social Security planning, the line of credit option is often the most flexible.

Using a reverse mortgage line of credit to cover living expenses during the early years of retirement can reduce the need to withdraw from investment accounts or claim Social Security early. In effect, the home equity temporarily replaces Social Security income.

Important reverse mortgage trade-offs to understand

While the strategy can be powerful, it isn’t risk-free. Reverse mortgages come with upfront costs, including mortgage insurance premiums and closing expenses. These costs can be significant, especially if the loan is opened solely for short-term use. Interest accrues on any borrowed funds, increasing the loan balance over time. This reduces remaining home equity and can affect what’s left for your heirs.

Borrowers must also continue to meet ongoing obligations, including property taxes, homeowners insurance, and home repairs. Failing to meet these requirements can cause the loan to become due.

Finally, the strategy assumes the homeowner plans to remain in the home long enough for the delayed Social Security benefits to meaningfully offset the costs. If a borrower plans to move or downsize soon, the math may not work in their favor.

Who this strategy tends to work best for

Using a reverse mortgage as a Social Security bridge is generally best suited for homeowners who plan to age in place, have meaningful home equity, and expect to live well into retirement.

It can be especially effective for single retirees or the higher-earning spouse in a married couple, since delaying benefits can increase survivor benefits for a spouse who outlives them. This approach also tends to work better for borrowers who already understand reverse mortgages as part of a broader retirement plan.

The bottom line on using a reverse mortgage to delay Social Security

A reverse mortgage can be more than a last-resort option. When used strategically, it may serve as a financial bridge that allows retirees to delay Social Security and potentially increase their lifetime income.

For the right homeowner, this approach can improve cash flow flexibility, protect investments, and strengthen long-term retirement security. But it requires careful analysis and a clear understanding of the costs and obligations.