Cash Flow Advantage = Tax Free Income

eaglefinancialgrp1Recently I was handed an article from a friend from the magazine Portland Home. In the Feb/March 2009  edition, Eagle Financial Group (EFG) wrote an article about reverse mortgages. I was very impressed! Today we are seeing  that financial advisors are getting asked a lot of questions about this unique method of increasing cash flow. EFG did a nice job on the article and actually brought up a benefit of reverse mortgages that I haven’t commented much on. . . . the issue and benefit of tax free income.

One of the ways in which reverse mortgages are used is to receive a monthly income (draw) that is guaranteed for as long as the homeowners remain in their home.  Based on the value of the home and the equity available, this could range from as much as $2,000 per month or more. Eagle Financial Group brought up the point that one could decrease the amount of income recieved from other means, that is taxable, while increasing the tax-free income from the reverse mortgage. This would lower the amount of taxable income yet keep the total cash flow level (if you so wish). It provides some flexibility in the amount of taxable income one recieves, and could kep one in a lower tax bracket during retirement. Now wouldn’t that be nice!

Now that this product is getting the attention of the financial advisory world, it appears that there is becoming more creative means of using the reverse mortgage as a legitimate tool for retirement planning.  If your financial advisor is not aware of the details surrounding reverse mortgages, feel free to share my blog with him/her. As a teacher at heart, I enjoy working with financial advisors and helping them to provide solutions for their clients.

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