Bucket 1- Income during Working Years
Bucket 2- 5-20% of Income Saved for Retirement
Bucket 3- 20%, 30%, maybe 40% put into Equity of House
When you retire, if you pull out money from Bucket 2, you will pay the deferred taxes. If you set up a Reverse Mortgage Line-of-Credit, start pulling money from there, it is tax-free money, leaving your Bucket 2 money alone, allowing it to further continue grow, and possibly leaving a larger legacy for your heirs.
The reverse mortgage is nothing more than turning the equity in the walls of your house into cash. It seems mystical or maybe you might be losing something. In order to live during your retirement years and not working any more, you will need to use the money in either Bucket 2 or Bucket 3, if you don’t have money coming into Bucket 1 anymore.
If you don’t have Bucket 1 or Bucket 2 to pull from, then Bucket 3, your house’s equity, is the only additional money available to compliment your social security income if you have started receiving Social Security already.
Bucket 3 may allow you to defer getting Social Security Income until age 70, where you are eligible for the maximum amount, if you decide to draw from Bucket 3 only.
Bucket 3 doesn’t do anyone any good during retirement years if it’s not used. Using Bucket 3, or the equity, there are no payments, if you choose that option.
As you know, the rules change a little bit once you enter retirement to maintain your standard of living. The cost of living doesn’t get any cheaper!
Proper use of your personal Buckets from a tax-planning strategy, from a cash flow strategy, and from an estate planning strategy and all the other factors that go into it, will give you the best retirement possible. It will make all the difference in the world for you and your family.
It only makes sense that you use and maximize the assets you have and properly use them at the right time when they should be used.
*You will need to maintain your property taxes and homeowner’s insurance on the house.