Withdrawals before age 59 risk a tax penalty. Your personal needs should decide. You may need a lump sum to buy a retirement home or retirement business. If going into your own business, set up a Keogh and move the funds there. A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership.
Reverse mortgages work much like traditional mortgages, only in reverse.
Rather than making a payment to your lender each month, the lender pays you. Most reverse mortgages do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Retired people may want to consider the reverse mortgage as a way to generate cash flow. Understand that reverse mortgages are rising-debt loans. This means that the interest is added to the principal loan balance each month, because it is not paid on a current basis.