Most retirement plans account for travel, hobbies, and everyday living. Far fewer plan for the single expense most likely to disrupt them: healthcare. A serious diagnosis, a stretch of in-home care, or a move to assisted living can cost tens of thousands of dollars in a single year, and the instinct is almost always the same: sell investments to cover it.
That instinct can quietly cost you far more than the care itself.
When you sell stocks or draw heavily from a retirement account to fund a health event, timing isn't on your side. Health emergencies don't wait for the market to be up. If you're forced to sell while your portfolio is down, you lock in losses and give up the future growth those dollars would have earned — a problem financial planners call sequence-of-returns risk. You also may trigger a larger tax bill in the same year (more on that in a future post).
In other words: paying for care out of your portfolio at the wrong moment can permanently shrink the nest egg meant to last the rest of your life.
For homeowners 62 and older, there's another asset already sitting on the balance sheet: home equity. A Home Equity Conversion Mortgage (HECM) — the federally insured reverse mortgage — can be set up as a growing line of credit you don't have to touch until you need it.
Think of it as a standby cushion:
That last point is the whole idea: the cushion lets your portfolio stay invested and keep working, while a health event is covered by an asset that isn't tied to the market's mood.
A HECM line of credit has an unusual feature: the available balance can grow over time, independent of your home's value. The unused portion increases at the same rate as the loan, which means the cushion you set up at 65 can be meaningfully larger by the time you're 75 — right when healthcare needs tend to rise.
Set it up early, leave it alone, and it quietly grows into a larger safety net exactly when the odds of needing it go up.
This strategy tends to make the most sense for homeowners who:
A reverse mortgage is a loan, and it deserves the same clear-eyed look as any financial decision:
Used deliberately, the goal isn't to spend your equity — it's to have it ready, so a health event never forces you to dismantle the rest of your retirement.
Yes. Funds from a reverse mortgage can be used for any purpose, including in-home care, medical bills, or the cost of assisted living for a spouse while you remain in the home.
No. With a line-of-credit option, you can leave the funds untouched and draw only when needed. You pay interest only on what you use.
The point of the strategy is the opposite — it lets your invested assets stay invested, so a health event doesn't force you to sell during a market dip.
Yes. You retain ownership and title. You're responsible for taxes, insurance, and maintaining the home.
Talk with an Improve Retirement advisor — no pressure, just clarity.
This article is for educational purposes and is not financial advice. A reverse mortgage is a loan that must be repaid. Consult a licensed advisor and complete HUD-required counseling before proceeding.