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How to smartly use a HELOC in retirement
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A home equity line of credit (HELOC) is a unique financial tool that comes with some of the features of a second mortgage and some of the features of a credit card. When you open a HELOC, you’re given a spending limit based on the equity in your home. You can then use your HELOC to cover any expense you’d like as long as your balance stays below your spending limit.
These lines of credit may prove to be invaluable for retirees. That’s because they provide a financial cushion that you can tap into at any time. Moreover, when you open a HELOC you don’t have to borrow the full amount of the credit line — you can simply borrow what you need when you need it.
Of course, if you’re a retiree, it’s important to be careful when using your assets — including your home’s equity. So, how do you smartly use a HELOC to help you in retirement?
Open a HELOC now give you a financial cushion in retirement.
How to smartly use a HELOC in retirement
First and foremost, it’s important to keep in mind that any money you borrow as part of your HELOC will need to be paid back at some point. That’s an important consideration because if you can’t pay the money back in your lifetime, your estate will likely absorb the expense — meaning you may leave less behind for your loved ones.
Nonetheless, there are plenty of circumstances in which a HELOC may be a smart move for a retiree. Some of the most common of these circumstances include:
Home repairs
Chances are that you’ve had to repair a few things around the house over the years. Roofs, air conditioners, plumbing and electrical systems only last so long. However, these and other repairs can be costly. According to Angi, you’ll pay an average of $9,224 to replace your roof. Other home repairs can be just as costly, if not moreso.
The problem is that retirees usually live on a fixed income. So, it can be difficult to come up with thousands of dollars to cover the cost of a home repair. A HELOC can help — and there’s an added incentive associated with taking this route.
When you use the money from your HELOC to repair or improve your home, the interest you pay on the loan may be tax deductible. So, when you use your HELOC for home repairs, you could reduce your overall tax burden.
Pay for your home repairs with a HELOC today.
Limit taxable events
Like many people, you may have invested in your retirement on a pre-tax basis. That means the taxes on these investments are deferred until you withdraw the money. As such, every time you pull money out of your 401(k) or IRA, with the exception of Roth alternatives, you’re creating a taxable event.
Of course, you plan for the general taxable events associated with withdrawing the money you need on a regular basis. However, if you have a reason to withdraw a lump sum, the income could push you into a higher tax bracket — significantly increasing your tax burden.
Rather than withdrawing a sum of money that could bump your tax bracket up, it may be a good idea to lean on your home equity. When you do, you can pay the money back over time, limiting the tax burden that comes with it by spreading the income out over several years.
Cover unexpected expenses
Unexpected expenses don’t stop the day you retire. Life is filled with unexpected events that can be costly before and during your golden years. Unfortunately, these unexpected expenses can be particularly detrimental to your budget in retirement.
After all, when you retire, chances are that you’ll be living on a fixed income. As you planned for retirement, you may have planned for inevitable expenses and created a safety net for emergencies. But when those emergencies are more costly than expected, that safety net may not be enough.
It’s during these times that a HELOC may be able to save the day. You could use a HELOC to access the money you need while absorbing the cost with small monthly payments over the course of multiple years.
Use a HELOC to cover unexpected expenses now.
The bottom line
A HELOC may prove to be a valuable tool in retirement. That is, as long as you’re smart about how you use it. A HELOC may come in handy when you need costly repairs to your home or you need to cover other expenses while limiting your taxable events. Explore how a home equity line of credit can create a financial cushion for your retirement.
NEW YORK — Drones have been banned from flying over several New Jersey towns, the Federal Aviation Administration confirms to CBS News.
The FAA order covers nearly two dozen towns, including Jersey City, Harrison, Edison, Bayonne and Camden. It will be in effect until Jan. 17.
The order says no unmanned aircraft can operate below 400 feet within one nautical mile of the airspace specified in each area. Additionally, it allows the government to use “deadly force” against the drones if they pose an “imminent security threat.”
“Pilots of aircraft that do not adhere to the procedures in the national security requirements for aircraft operations contained in this section may be intercepted, and/or detained and interviewed by federal, state, or local law enforcement or other government personnel,” the order reads in part.
Several of the zones are centered around infrastructure, like power substations. Others cover areas like the Kearny, New Jersey port and airspace around military installations like Joint Base McGuire-Dix-Lakehurst in South Jersey, or airports such as Newark-Liberty International Airport.
Earlier this month, the Florham Park, New Jersey police chief told residents drone sightings had been reported above “water reservoirs, electric transmission lines, rail stations, police departments, and military installations.”
Where are drones banned in New Jersey?
North Jersey:
- Cedar Grove
- Bridgewater
- North Brunswick
- Metuchen
- South Brunswick
- Edison
- Branchburg
- Sewaren
- Jersey City
- Harrison, Essex County
- Elizabeth
- Bayonne
- Clifton
- Kearny
Central Jersey:
South Jersey:
- Burlington
- Evesham
- Camden
- Gloucester City
- Westampton
- Winslow
- Hancocks Bridge, Salem County
See the full order from the FAA here.
Mysterious drones over New Jersey and beyond
Drones sightings have been reported all month long, first over Morris County, New Jersey and then over several other East Coast states.
Federal, state and local officials have been demanding more information about where they are coming from and what’s being done to stop them. The FBI is leading the investigation and tells CBS News it has received thousands of tips.
While the White House says there is no known threat, New Jersey Gov. Phil Murphy recently sent a letter to President Joe Biden asking for more federal resources.
On Wednesday, a push from Sen. Chuck Schumer to give local law enforcement more ways to track drones was blocked in the Senate.
Check back soon for the latest updates on this developing story.
contributed to this report.
Two highway crashes in southeastern Afghanistan killed a combined total of 50 people and injured 76, a government spokesman said Thursday.
One was a collision between a bus and an oil tanker on the Kabul-Kandahar highway late Wednesday, said Hafiz Omar, a spokesman for the governor of Ghazni province.
The other, also late Wednesday and in the same province, was in a different area of the same highway, which connects the Afghan capital with the south.
MOHAMMAD FAISAL NAWEED / AFP via Getty Images
Hamidullah Nisar, the provincial head of the Taliban-run Information and Culture Department, told the Reuters news agency the other accident involved a cargo truck, adding that some of those injured in both collisions were in critical condition.
Omar said many of the injured were taken to hospitals in Ghazni and patients in more serious condition were transferred to Kabul. Women and children were among the casualties, he said.
Authorities were in the process of handing over the bodies to families, Omar said.
MOHAMMAD FAISAL NAWEED / AFP via Getty Images
Crash survivor Abdullah Khan, who was being treated in a Ghazni hospital, said he didn’t know how many people had either died or were injured.
“I got out from the bus myself and heard the sound of moaning. There was blood everywhere. Some people had head injuries and others had hurt their legs.”
MOHAMMAD FAISAL NAWEED / AFP via Getty Images
Traffic accidents are common in Afghanistan, mainly due to poor road conditions and driver carelessness.
MOHAMMAD FAISAL NAWEED / AFP via Getty Images
CBS News
France’s President Emmanuel Macron tours cyclone-battered Mayotte, meets survivors pleading for help
Mamoudzou, Mayotte — France’s President Emmanuel Macron traveled Thursday to the Indian Ocean archipelago of Mayotte to survey the devastation that Cyclone Chido wrought across the French territory as thousands of people tried to cope without bare essentials such as water or electricity.
“Mayotte is demolished,” an airport security agent told Macron as soon as he stepped off the plane.
The security agent, Assane Haloi, said her family members, including small children, are without water or electricity and have nowhere to go after the strongest cyclone in nearly a century ripped through the French territory of Mayotte off the coast of Africa on Saturday.
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“There’s no roof, there’s nothing. No water, no food, no electricity. We can’t even shelter, we are all wet with our children covering ourselves with whatever we have so that we can sleep,” she said, asking for emergency aid.
Macron got a helicopter tour of the damage and was to spend Thursday night on the far-flung French territory. After flying over the destruction, he headed to the hospital in Mamoudzou, Mayotte’s capital, to meet medical staff and patients.
Wearing a traditional Mayotte scarf on his white shirt and tie, sleeves rolled to the elbows, the French president listened to people asking for help. A member of the medical staff told him some people hadn’t had a drink of water for 48 hours.
Some residents also expressed agony at not knowing about those who have died or are still missing, partly because of the Muslim practice of burying the dead within 24 hours.
LUDOVIC MARIN/POOL/AFP/Getty
“We’re dealing with open-air mass graves,” Mayotte lawmaker Estelle Youssoufa told reporters. “There are no rescuers, no one has come to recover the buried bodies.”
Some survivors and aid groups have described hasty burials and the stench of bodies.
Macron acknowledged that many who died hadn’t been reported. He said phone services will be repaired “in the coming days” so that people can report their missing loved ones.
French authorities have said at least 31 people died and more than 1,500 people were injured, more than 200 critically. But it’s feared hundreds or even thousands of people have died in total.
Abdou Houmadou, 27, said emergency aid was needed immediately, not Macron’s presence.
“Mr. President, what I’d like to tell you… is I think the spending you made from Paris to Mayotte would have been better spent to help the people,” he said.
Another resident, Ahamadi Mohammed, said Macron’s visit “is a good thing because he’ll be able to see by himself the damage.”
“I think that we’ll then get significant aid to try and get the island back on its feet,” the 58-year-old said.
LUDOVIC MARIN/POOL/AFP/Getty
Macron’s office said four tons of food and medical aid, as well as additional rescuers, were aboard the president’s flight. A navy ship was due to arrive in Mayotte on Thursday with another 180 tons of aid and equipment, according to the French military.
People living in a large slum on the outskirts of Mamoudzou were some of the hardest hit by the cyclone. Many lost their houses, some lost friends.
Nassirou Hamidouni sheltered in his house when the cyclone hit.
His neighbor was killed when his house collapsed on him and his six children. Hamidouni and others dug through the rubble to reach them.
The 28-year-old father of five is now trying to rebuild his own house, which was also destroyed.
He believes the death toll is much higher than what’s officially being reported, given the severity of what he lived through.
“It was very hard,” he said.
Mayotte, located in the Indian Ocean between mainland Africa’s east coast and northern Madagascar, is France’s poorest territory.
The cyclone devastated entire neighborhoods and many people ignored the warnings, thinking the storm wouldn’t be so extreme.
Mayotte has more than 320,000 residents according to the French government. Most are Muslim and French authorities have estimated another 100,000 migrants live there.
Mayotte is the only part of the Comoros archipelago that voted to remain a part of France in a 1974 referendum.
Over the last decade, the French territory has seen a massive influx of migrants from the neighboring islands – the independent nation of Comoros, which is one of the world’s poorest countries.
