He Taps a Home-Equity Line at 67 to Wait for a 24% Bigger Social Security Check, as HELOC Debt Hits $481 Billion. Borrowing $2,500 a Month Until 70 Can Pile Up About $11,500 in Interest Before His First Payment
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A 67-year-old homeowner reaches the age for full benefits with a Social Security estimate of about $2,500 a month. He doesn’t claim it. He opens a home equity line of credit, draws that same amount every month to pay the bills, and plans to start benefits at 70, when his check will be 24% larger. On paper, it’s a clean trade: borrow against the house for three years and lock in a raise for life.
Plenty of homeowners are drawing their equity right now. The New York Fed reported on Nov. 10 that balances on these credit lines rose $23 billion in one quarter, the largest bump since 2005.
Social Security is central to this plan because it’s the one income source that lasts as long as you do and rises with inflation. The 3.6% inflation adjustment coming in 2027 is a reminder that every future increase compounds on whatever base you lock in.
A 24% Raise That Must First Repay a $90,000 Loan
Waiting past 67 earns delayed retirement credits of 8% a year until 70. His $2,500 check grows to about $3,100, or $600 more every month for life, before future inflation adjustments.
Thirty-six draws of $2,500 leave him owing $90,000 at 70.
Because the balance builds gradually, it averages roughly $45,000 over the three years. At an assumed 8.5% rate, interest comes to about $11,500. Home equity rates are usually variable, so the real bill could land higher or lower.
That interest also brings no tax break. Federal law prohibits the deduction for home equity interest unless the money buys, builds or substantially improves the home (26 U.S.C. § 163(h)(3)(F)(i)(I))[1]. Living expenses don’t qualify.
The extra $600 a month needs 12.5 years just to cover the $90,000 he borrowed.
Add the interest and it’s about 14 years, which puts his break-even near age 84. That figure is optimistic, because interest keeps running on whatever he still owes after 70. Delaying still pays off well for someone who lives into his 90s. Borrowing simply pushes the payoff later than most people assume.
Where the Plan Squeezes His Budget After 70
The biggest strain shows up at 70. He starts collecting $3,100 a month while carrying a six-figure balance secured by his house. Once the line’s draw period ends and repayment begins, the required payment can eat much of the raise he waited for. A missed payment also puts his home at risk, which no credit card balance can do.
If he has an IRA or 401(k), drawing from it from 67 to 70 bridges the same gap without interest. Those withdrawals are taxable. But taking them before Social Security begins keeps them from stacking on top of benefits, where they can make up to 85%[2] of the check taxable (26 U.S.C. § 86(a)(2)). The one tax point in borrowing’s favor: loan draws aren’t income, so they never count toward that formula.
A smaller account balance also means smaller required withdrawals later. Those start at 73 for people born in 1959 or earlier and at 75 for those born in 1960 or later.
Marriage changes the math the most. When the higher earner delays, the surviving spouse receives that larger monthly benefit. A wife who outlives him by a decade collects that extra $600 a month even if he dies before breaking even.
Run the Break-Even With Interest Before Signing the Loan
- Count the borrowing cost in your break-even age. Standard break-even charts ignore interest. Add yours, then compare the result with your health, your family history and your spouse’s age. If you expect to live well past 85, or a spouse will rely on the survivor check, the delay can still be worth it.
- Protect the house first. Claiming a smaller check is the decision you can live with. Losing a home over a variable-rate loan is the mistake that’s toughest to undo. A middle path works too: cover part of the monthly gap from savings or part-time work and borrow only the rest. That shrinks both the balance and the interest.
A one-point change in the loan’s rate, a few years’ difference between spouses’ ages or a large IRA can each move the answer, so run the numbers with your own figures before you open the line.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
