Summary
For most of us, our house carries much more equity than it did when we were just starting out. How to use that equity to benefit you and your family is a key retirement question. The combination of a home equity conversion mortgage (HECM) and longevity protection in the form of a qualifying longevity annuity contract (H2I) provides a beneficial mix of an immediate income boost and additional long-term liquidity.
A QLAC is designed to produce lifetime income from a rollover IRA account. A HECM is the element that binds with a QLac to make H2I. HECMs allow the homeowner to convert a percentage of home equity into tax-free cash.
The H2I income translates to 11.5% per year on the $150,000, tax-free until age 85. The liquidity grows even faster after age 85 with the payment of interest, exceeding $1 million by age 90. An H2i plan provides more income and greater liquidity at the expense of a lower legacy payoff.
