Personal Finance
I own a $5 million house in Miami - should I do a reverse mortgage for more income?
![Reverse Mortgage](https://247wallst.com/wp-content/uploads/2024/09/Untitled-design-2024-09-13T143139.946.jpg)
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A Reddit post recently caught my attention from a 63-year-old retired anesthesiologist facing a financial dilemma.
With a net worth of approximately $11 million, including a $5.2 million Miami home and a $4.2 million taxable investment account, he’s grappling with how to sustain a lavish lifestyle costing $35,000 per month.
Despite substantial assets, his current income streams—$30,000 annually from dividends and $2,500 monthly from Social Security—fall short of covering his expenses.
He’s contemplating a reverse mortgage on his Miami home to bridge the gap but is uncertain if this is the right move.
First, let’s break down his assets that he shared in the post:
His immediate concern is generating enough cash flow to maintain his $35,000 monthly spending without liquidating his assets or significantly altering his lifestyle.
A reverse mortgage allows homeowners aged 62 or older to convert part of their home equity into cash without selling the home or incurring monthly payments. While this seems appealing, especially since he wishes to remain in his customized home, there are several factors to consider:
Given his substantial net worth and other assets, a reverse mortgage might not be the most financially prudent option.
This is just my opinion and not financial advice, but here’s my take. While a reverse mortgage offers a way to unlock home equity without selling, it may not be the optimal solution for someone with diversified assets and significant net worth. By re-evaluating his investment strategy, utilizing underused assets like the Bonita Springs condo, and strategically accessing retirement accounts, he can enhance his income streams without incurring the costs and risks associated with a reverse mortgage.
It’s essential to approach this decision comprehensively, considering both immediate needs and long-term financial health. Consulting with a financial advisor can provide tailored strategies to ensure he enjoys his retirement years comfortably and confidently.
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