facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
"Should I live under a bridge?" Ken Robinson quoted in Marketwatch on reverse mortgages. Thumbnail

"Should I live under a bridge?" Ken Robinson quoted in Marketwatch on reverse mortgages.

Question:  I am a 76-year-old widower who is retired school teacher. My Social Security and retirement income is fixed at about $5,600 per month. I have lived in Edmonds, Wash. for 49 years, and my property taxes rise quickly. My property taxes likely will be $20,000 or more for 2025; I think home sales drive up my property taxes, not improvements. I do not have the money to keep up with these taxes with a $10,000 IRS limit on deductions.

Answer:  Your situation is actually quite common, says Mark Struthers, a certified financial planner (CFP) at Sona Wealth Advisors. “As we live longer in retirement, inflation can have a devastating impact on fixed incomes,” Struthers says. “Compounding is magical when it works for you and awful when it works against you. Two of the biggest culprits are healthcare and housing inflation and the cost of maintaining and paying taxes on a home is usually correlated with its value.”

That said, there are steps you may want to consider taking — including looking for affordable, and even pro bono financial advice. Here are some options to consider, and where to find professional advice that is affordable.

Reverse mortgage: You might be a good candidate for a modern reverse mortgage, says Kenneth Robinson, a CFP at Practical Financial Planning. “Once federal regulations were adopted some years ago, the Home Equity Conversion Mortgage (HECM) eliminated many of the problems we came to associate with the term reverse mortgage,” Robinson says. “I used to dislike reverse mortgages. Now, for many homeowners, they can be the most efficient way to stay in their homes.”

Basically, a reverse mortgage is a loan where home equity is turned over in exchange for regular monthly payments. As a result, homeowners no longer make mortgage payments as long as they live in the home, but the loan and interest are repaid once a homeowner sells the home or passes away.

Most importantly, you don’t have to pay back the loan as long as you live in the  home. “The home is the only asset the lender can use to pay back the money owed,” Robinson says. “If the loan ends up being more than the home is worth, the difference can’t be made up from other assets and the line of credit will grow at a rate that’s determined at the outset of the reverse mortgage.”

Relocation: If that’s not an option, would you move? “Edmonds is a very expensive part of the country to live in, and I know it’s not fair, but you may not have the income to stay there,” suggests Gordon Achtermann, a CFP at Your Best Path Financial Planning. “If your income is mostly fixed and your expenses keep rising, something must change.”

While you don’t mention if you have a mortgage, if home values are going up very quickly, you must have significant home equity. “Consider moving to a lower cost-of-housing area and see if you can purchase a home for all cash with the proceeds from selling your current home,” Achtermann says. “If you don’t have a mortgage, then you will have a nest egg to invest left over after moving.”

Financial advice: Talking to a fee-only adviser for investing recommendations based on your risk tolerance and life expectancy would also be helpful, says Ryan Haiss, a CFP at Flynn Zito Capital Management. “Oftentimes, you can obtain a no-cost, no-obligation meeting to see if a financial adviser will be able to assist with the challenges you’re facing,” Haiss says. “A financial adviser can assist you in creating a budget and finding ways to mitigate the impact of rising property taxes.”

Different states have different relief opportunities that can meaningfully impact your bottom line. “It looks like Washington has programs that may work for you,” Struthers says. “At first look, you may make too much, but the devil is in the details and worth exploring.”

Washington State offers different property tax exemptions and deferrals for homeowners with limited income, senior citizens and more, so it’s worth looking into whether you qualify. There are also pro bono options available that don’t cost the client anything and still provide meaningful advice.

Moreover, there are hourly advisers who don’t require a lot of assets to work with them. Fee-only hourly planners typically charge between $150 and $450 per hour and the reason you’ll want to work with someone like this is because they’re only paid by you, the client, and that helps eliminate the potential for conflicts of interest. “They could help you explore options with the state or other options that may allow you to stay in your home,” ,” Struthers says. “Hiring any professional is about making better decisions and making sure nothing is missed, but there’s no magic bullet. Organizations like XY Planning Network are good places to look for an hourly planner.”