Most people spend 40 years building a retirement. Then they make the choices that decide how it turns out in about 10. That window runs roughly from 55 to 65. Some call it the Decision Decade. It’s when your savings usually peak, your options narrow, and the big choices start coming fast. When to stop working. When to claim Social Security. What to do with the house. Get these right and the next 30 years get easier. Get them wrong and you feel it for a long time. I’ve worked with retirees and pre-retirees for a very long time. Here’s what I see matter most in this decade, and what you could do about it.
Your money is at its peak, and most exposed
In your 50s and early 60s, you likely have more saved than you ever will. That’s good news. It’s also the risk. Your money is at its peak, and most exposed. A 20% market drop at age 40 hurts, but you have decades to recover. You keep contributing. You buy low. Time does the work. The same drop the year you retire is different. Now you’re pulling money out, not putting it in. You sell shares when prices are down to cover living costs. Those shares are gone. They don’t come back when the market does.
This is called sequence-of-returns risk. Two people can earn the same average return over 25 years and end up in very different places. The only difference is when the bad years showed up. You can’t control the stock market. You can control how much you’re forced to sell when it’s down1.
The big decisions all around the same time. When to retire. One more year of work could change the whole math. So can one less. You can start taking Social Security at 62. Your full retirement age comes later, usually age 65-66 wait until 70 and the check grows about 8% for each year you delay past full retirement age. Medicare at 65, Miss your enrollment window and penalties could follow you for life. Pension elections, lump sum or monthly? Single life or joint? Often a one-time choice. Where to live. Stay, rightsize, move closer to family, or age in place. How to use your home equity, for many people, it’s their largest asset. Most never plan to use it2.
None of these decisions stand alone. Your Social Security timing affects how much you pull from savings. Your savings distribution plan could affect your taxes3. Your housing choice affects all of it. That’s why this decade needs a plan, not a series of one-off guesses.
At 45, a bad call is a lesson. At 63, it can be permanent. Claim Social Security early and the smaller check is yours for life. Take the wrong pension option and you usually can’t change it. Sell the house at the wrong time, or wrong reasons, and buying it back may not be possible. That’s not a reason to panic. It’s a reason to slow down and look at the whole based on your preferred outcome. Turn off the talking heads!
Most retirement plans treat the house as a place to live. That’s it. But for many homeowners, it could help achieve financial goals more than their 401(k). At 62, you become eligible for a Home Equity Conversion Mortgage, or HECM. That’s the FHA-insured reverse mortgage. Most people think of it as a last resort. Used early and on purpose, it can be one of the best tools in the plan.
A HECM line of credit can be set up and left alone. The unused portion grows over time. The longer it sits, the more you can access later when you may not be able to deal with the paperwork or time needed to get one4.
A bridge to a bigger Social Security check, use the line to cover living costs for a few years while you delay claiming Social Security. Your benefit grows. The larger check lasts for life.
No required monthly mortgage payment. You still pay taxes, insurance, and upkeep. But freeing up the monthly payment changes cash flow.
The key is timing. Setting up early gives the line time to grow. Waiting until you’re in a crisis gives you fewer options.
If you’re in the Decision Decade, or about to be, start here, know your budget, what do you spend each month? What income will you have in retirement? Is there a spending gap? Get your Social Security estimate. Log in at ssa.gov. See what you’d get at 62, full retirement age, and age 70. Know your assets, savings, investments, pensions, and home equity. All of it, on one page. Plan for a down market, decide now where you’ll pull money from if the stock or bond markets drops in year. Look at the house as part of the plan, Stay or move? Use the equity or leave it? Get the facts before you choose. Build your team, an agent, financial advisor, a tax professional, and someone who knows housing financial goals, or trusted family members.
The Decision Decade isn’t about one big choice. It’s about a handful of connected choices, made in a short window, that could shape the rest of your life. You don’t have to get every one of them perfect. You do have to make them on purpose, with the full picture in front of you. That should include your home equity.
If you want to see how your home equity fits your retirement plan, let’s talk.
- Rate does not provide financial planning services. The consumer should always consult a financial professional for information regarding financial decisions in their particular situation
- Consult a financial professional. Visit www.ssa.gov
- OriginPoint does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.
- If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size over time. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.
This is not a commitment to lend. Home Equity Conversion Mortgages (HECMs) are eligible for borrowers 62 and older. Proprietary Reverse 55+, state restrictions apply (TX, NC, NH 62+; MA, WA, LA, NY 60+). Borrower must pay property taxes, Homeowner’s insurance, HOA dues (as applicable), and maintain the home and using it as primary residence or the loan will need to be repaid. Otherwise, the loan must be repaid when the borrowers leave the home more than 12 consecutive months, transfer their property’s title to another person, the last borrower passes away or sells the home. Prices, guidelines and minimum requirements are subject to change without notice. Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision. This material has not been reviewed, approved or issued by HUD, FHA or any government agency. Rate is not affiliated with or acting on behalf of or at the direction of HUD, FHA or any other government agency. To find a Reverse Mortgage counselor near you, search the HECM Counselor Roster at https://entp.hud.gov/idapp/html/hecm_agency_look.cfm or call (800) 569-4287.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
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Have questions or ready to take the next step in your home financing journey? I’m here to help.
Call: (858) 526-3037
Email: carl.spiteri@originpoint.com
Carl Spiteri
Producing Partnership Branch Manager
NMLS ID: 286890
Licensed in: AZ, CA, CO, FL, ID, MI, MT, NV, OR, SC, TN, TX, WA, WY
