In Front of Tax Professionals
Nor to long ago, I stood in front of a room filled with CPAs, Enrolled Agents, and Tax Preparers. I asked one simple question:
“How many of you have ever looked at a client’s tax return and thought, ‘There’s a story here… but I’m not quite sure how to tell it’?”
Hands went up. Heads nodded. We all know the 1040 does more than tally income and deductions—it reveals pressure points, missed opportunities, and in many cases, deep financial stress hiding in plain sight.
One tax preparer pulled me aside afterward and said, “I’ve seen returns that made me want to pick up the phone and tell their advisor: ‘This client needs a plan, not just a refund.’”
That’s exactly why I was there—to introduce a resource most tax pros overlook, yet one that can quietly and powerfully change the trajectory of retirement:
Housing wealth—accessed through a modern reverse mortgage.
What Is a Reverse Mortgage?
A reverse mortgage is a federally insured loan for homeowners age 62 or older that allows them to convert a portion of their home’s equity into tax-free cash—without selling the home, giving up ownership, or taking on a required monthly mortgage payment.
The amount available is based on three key factors: the age of the youngest borrower (or eligible non-borrowing spouse), the value of the home, and current interest rates. For example, a 70-year-old couple with a $850,000 home might qualify for approximately $345,000 to $308,000 in reverse mortgage proceeds at today’s rates.
Because a reverse mortgage must be the first mortgage on the property, any existing loans will be paid off at closing. Whatever is left becomes accessible as a growing, tax-free line of credit that can be used at any time—for income, emergencies, Roth conversion taxes, long-term care costs, or simply as a standby reserve.
The Growing Line of Credit (GLOC)
Below is an example of a initial line of credit of $339,000 and its potential growth (A) and convertibility (B,C,D) which shows how in any given year the GLOC could be converted into a monthly payment for the Life of the Loan (B) or 5 and 10 years draw periods (C/D) The truth is that this is just a snapshot of the flexibility of the reverse mortgage line of credit as a retirement planning resource.
Why This Matters for Tax Pros
Most homeowners over 62 are sitting on hundreds of thousands—sometimes millions—in home equity. And yet, many of these same clients are:
- Drawing down taxable accounts too quickly
- Paying more in taxes than necessary
- Postponing needed care
- Quietly worried they’ll outlive their savings
As a reverse mortgage educator and planner with 25 years of experience, I can tell you: when used strategically, a reverse mortgage becomes more than a last resort—it becomes a tax-optimized, cashflow-flexible retirement planning tool.
And the gateway to discovering who it can help? Is often the tax return.
15 Micro Insights from a Client’s Tax Return
Here are 15 cues you might find in a return that signal it’s time to explore housing wealth:
Does your client…
- Own a home?
- Have an existing mortgage payment?
- Have the ability to sustain that payment—or the desire to?
- Have Social Security benefits being taxed due to excess provisional income?
- Express concern about creeping into a new tax bracket?
- Have sufficient assets to meet life expectancy—and 5 years beyond?
- Have enough income to maintain their lifestyle today and tomorrow?
- Have exposure to income disruption from the death of a spouse or pension?
- Have liquid, tax-advantaged funds available for emergencies?
- Show a draw/frequency pattern that may not be sustainable long term?
- Know how they’ll pay for future long-term care needs?
- Talk about downsizing for suitability or liquidity?
- Want to convert to a Roth but don’t know how to fund the tax bill?
- Have a contingency plan for market volatility?
- Ever wish for an additional growing, tax-free bucket of money?
These are more than line items. They’re opportunities to initiate powerful planning conversations—without ever pitching a product.
Five Case Studies That Bring These Ideas to Life
Case Study 1: Bill and Sandy, 65/63 | Newly Retired
Bill and Sandy scheduled a review meeting after visiting their accountant. When their advisor reviewed the return, he asked if their retirement dreams had changed.
They admitted they felt “a little” concerned about unexpected expenses, long-term care, or whether they’d outlive their savings.
Their advisor noticed they were still paying a $1,500 mortgage. When asked if they’d prefer that payment to be mandatory or voluntary, they quickly answered, “Voluntary.”
He showed them a Customized Housing Wealth Illustration that addressed all three concerns—without changing their financial behavior. They were amazed how one overlooked asset could create such peace of mind.
Case Study 2: Evelyn, 72 | Widow, Retired Librarian
Evelyn’s tax return showed her Social Security was being heavily taxed due to IRA withdrawals. With no long-term care coverage and few liquid assets, she was concerned about future expenses but hesitant to touch her remaining savings.
Her advisor introduced a housing wealth strategy using her paid-off $650,000 home. It created a tax-free reserve and allowed her to reduce taxable withdrawals—without sacrificing her lifestyle.
Tears welled up as she said, “I never imagined my home could take care of me the way I took care of it.”
Case Study 3: Greg and Darlene, 68/66 | Small Business Owners
Greg and Darlene’s tax return showed rising income and a looming RMD problem. They wanted to do Roth conversions but didn’t want the tax hit.
Their advisor asked, “What if you didn’t have to touch your portfolio to cover the taxes?”
By accessing equity in their $850,000 home, they funded a 5-year Roth strategy, reduced lifetime taxes, and protected their legacy—without drawing down investments.
Case Study 4: Bob and Sally, 73 | Retired Couple
Bob and Sally live in a $700,000 home with a $200,000 mortgage. Their tax return showed interest deductions but also flagged excess IRA withdrawals that increased their tax bill.
They were “just trying to be safe,” they said. Their advisor showed how eliminating the mortgage payment through a reverse strategy could reduce taxable income and provide flexibility for future needs.
They responded, “Why didn’t anyone tell us this sooner?”
Case Study 5: Bill, 68 | Retired Engineer
After selling highly appreciated stock to cover a family expense, Bill was shocked by the capital gains taxes. His advisor asked, “What if there was a way to access funds for future needs—without creating more taxes?”
A housing wealth strategy allowed Bill to create a liquid, tax-free buffer and preserve his portfolio for future growth.
Conclusion: The Tax Return Is More Than Math—It’s a Map
Every 1040 tells a story. Not just about what’s been earned or spent, but about where your client is headed, and whether their plan will get them there.
Too often, tax returns are treated as paperwork to be filed away. But for advisors and tax professionals willing to look a little deeper, they can be one of the most revealing—and underused—tools in planning.
They show us the pressure points. The gaps. The “something’s not quite right here” signals that could be hiding real financial stress. And in many cases, they show us where housing wealth might play a meaningful role.
A reverse mortgage isn’t for everyone. But for the right client, at the right time, it can create flexibility, reduce tax strain, and turn home equity into a financial resource instead of a dormant asset.
So the next time you’re reviewing a return, pause and ask: What’s the real story here? And is there a way we can help this client retire not just with a refund—but with confidence?
What to Do When You Have a Client or a Case?
- Go to www.HousingWealthPro.com and request a Housing Wealth Illustration. Give Details in the “Notes” Section including the clients’ phone # if they would like a Housing Wealth Assessment. You can also
- Schedule a Time to Speak with Me: Click Here
Related Articles:
- Seven Ways to Lower Retirement Taxes With a Reverse Mortgage
- Creating a Long-Term Care Health Plan with Reverse Mortgages
- How to Uncover the Social Security Time Bomb
The content of this blog is for financial advisors and professionals only and is not intended for consumer use. Names, cases, and scenarios are fictionalized for illustrative purposes. The opinions expressed here are those of the author alone and do not reflect the views of any affiliated entities or individuals. Don Graves, NMLS #142667.
