Older Americans Hold a Record $15.34 Trillion in Housing Wealth. A Retiree Could Tap $50,000 Without Increasing Taxes on His Social Security

Americans 62 and older hold a record $15.34 trillion in home equity, according to an October 2026 HousingWire report citing the National Reverse Mortgage Lenders Association. The figure topped $15 trillion for the first time, reflecting the enormous amount of wealth older homeowners have accumulated in their properties.

Plenty of those homeowners are wealthy on paper and short on cash. Picture a 70-year-old single man with $500,000 in home equity, $2,500 a month from Social Security, and a traditional IRA.

He has about $10,000 a year in other taxable income and needs $50,000 for home repairs and living expenses. He could withdraw it from his IRA or borrow against his house. Both would give him access to the money, but they could produce very different tax bills.

How a $50,000 IRA Withdrawal Pulls Social Security Into Taxable Income

The IRS starts with what is often called combined income: your other income, including interest that is exempt from taxes, plus one-half of your benefits. For a single filer, benefits start becoming taxable above $25,000, and up to 85% can be taxed above $34,000.

Those who are married and file jointly use $32,000 and $44,000.

Our retiree collects $30,000 a year in benefits, so half is $15,000. Add his other income and combined income lands at $25,000, right at the line. None of his Social Security is taxed.

Now he takes out $50,000 from the IRA. Combined income jumps to $75,000, and $25,500 of his benefits becomes taxable, the full 85% ceiling.

The withdrawal adds $75,500 to his income before deductions: $50,000 from the IRA and another $25,500 in taxable Social Security benefits. That doesn’t mean he owes $75,500 in taxes. It means a single withdrawal has made substantially more of his retirement income subject to federal income tax.

Why Reverse Mortgage Dollars Stay Off the Tax Return

Money from a reverse mortgage is borrowed, and the IRS treats it as loan proceeds rather than taxable income. If he draws $50,000 through a Home Equity Conversion Mortgage, the federally insured reverse mortgage for homeowners 62 and older, his combined income stays at $25,000. His Social Security remains untaxed, and his taxable income does not shift.

The IRA withdrawal also leaves him below the $109,000 income threshold used for Medicare premium surcharges in 2026. That threshold can change from year to year, and Medicare generally looks back two years when calculating the extra charge.

Borrowing Costs That Can Wipe Out the Tax Savings

A reverse mortgage requires no monthly payments, but interest and fees are added to the loan balance each month and the balance grows. As the balance rises, his equity shrinks. Costs include interest, mortgage insurance, and other fees and costs, along with origination and servicing charges.

He must also keep paying property taxes and homeowners insurance, live in the house as his principal residence, and keep the house in good condition. The loan comes due when he no longer lives there, which usually means he dies, sells, or moves out permanently.

Who Comes Out Ahead and Who Should Run the Numbers Twice

This approach fits best for homeowners 62 or older with plenty of equity, thin liquid savings, and a large taxable IRA withdrawal on the table. It fits poorly for someone who might move into assisted living within a few years, because upfront costs get spread over a short stretch. It also fits poorly for anyone set on leaving the house to heirs with little debt attached.

Spreading IRA withdrawals across tax years can sometimes lower the overall tax bill. In this example, taking $25,000 in each of two years would still make part of his Social Security taxable in both years, but the smaller withdrawals could keep more income in lower tax brackets. The actual savings would depend on his deductions and other income in each year.  The Social Security tax torpedo is one of several IRS rules that silently drain retirement accounts. We mapped out the rest in a free guide here. Run the numbers for your own income before assuming splitting works.

Checks Before You Tap $50,000

1. Run the Social Security taxation worksheet in the Form 1040 instructions, or ask a tax preparer to, so you know the true federal tax cost of the IRA withdrawal in dollars.
2. Ask reverse mortgage lenders for full written cost disclosures, including origination fees, mortgage insurance, servicing charges, and the interest rate.
3. Confirm eligibility and complete the required counseling with a HUD-approved counselor. The counseling certificate is valid for 180 calendar days.
4. Compare total borrowing costs over the years you expect to stay in the home against the one-time tax bill from the IRA withdrawal.

Keeping Social Security out of taxable income is a real advantage, but it does not automatically make a reverse mortgage the cheaper choice. The mistake toughest to undo is borrowing against the house to save a tax bill that turns out smaller than the interest and fees. Your filing status, other income, and how long you plan to stay put can flip this math. Put your own numbers side by side before you choose.

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