The idea is not widely implemented. But it has caught the attention of the Center for Retirement Research at Boston College, which published a research paper on the strategy last year.
That is because many individuals face low levels of income in retirement. The typical working household ages 55 to 64 with access to a 401(k) plan had just $135,000 in retirement assets in 2016, according to the research. That amounts to just $600 per month.
Other factors contributing to that retirement-income shortfall include longer life expectancy, high health-care costs, low interest rates and fewer pensions. In addition, Social Security income does not go as far, and Medicare premiums are rising.
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One area where many individuals have money tied up is in their homes.
That has led some to consider a reverse mortgage, whereby you do not have to repay the mortgage while you are living in the house. Interest and fees are added to your balance, which does not have to be repaid, until you move or die.
For some, deferring property taxes may be a more attractive option, according to the Center for Retirement Research. That is because the amount you postpone is less, which means there is less to pay back in the end. Property tax deferrals also come without the complexity and upfront costs of reverse mortgages.
The average older homeowner in Massachusetts, for example, may save approximately $4,000 a year through property tax deferrals.