Jane is 72 and has $1,000,000 left in her portfolio. She takes healthy disbursements quarterly to live the lifestyle she desires. Projections show her funds won’t outlast her current spending. Her home is worth $500,000 and she doesn’t owe anything on it.

A reverse mortgage can be used for two options in Jane’s case:

  1. A lump sum of 60% can be taken out and then invested in an annuity to supplement her monthly appetite.
  2. A reverse mortgage can be set up as an annuity. Instead of a lump sum, a monthly disbursement from the equity of the house is sent to Jane.
  • Disbursement
  • Current
  • 60%

The “Current” line shows how Jane needing $100,000 a year, Jane will run out of money in about 20 years unless something is done. The “60%” line shows Jane taking the lump sum of $300,000 which would instantly increase the portfolio balance and assuming the standard 8% growth maintains, this will get her across the finish line without running out of money. Finally, the “disbursement” line illustrates setting up a monthly tenure payment of $2,000 a month with a Reverse Mortgage will also help, but she will still need to withdraw $76,000 a year to get to the $100,000.