Chuck (84) and Lori (81) did it right in retirement. They took advantage of their go-go years and did a ton of traveling and enjoyed their retirement to its fullest. They have a decent income of over $60,000 a year. However, they don’t have much left in retirement savings, and they racked up almost $75,000 in credit card debt.

Between credit card debt and a mortgage payment, they had almost $2,800 a month going out just to service debt, which is about 56% of their gross income. If either of them was to pass away, they would lose $1,685 of income. This would leave the remaining spouse with a debt situation that would be unsustainable. Over 84% of the gross income would be needed to service the debt payments.

Do they need a reverse mortgage? Nope. They are making it work and “surviving” financially.

Should they do it anyway? YES!

Here’s the problem: If they wait until one of them passes, the remaining spouse may not qualify for a reverse mortgage because they will not have enough disposable income required for the loan. This could be a financially devastating nightmare for the remaining spouse.

With the reverse mortgage, they were able to free up $699 in principal and interest monthly payment from their mortgage. They were also able to get a little over $15,000 cash in the first year from the equity in their home. Then, on the one-year anniversary of their loan, they would get an additional $33,000 from the line of credit.

The $15,000 would pay off two credit cards immediately, freeing up an additional $441 a month for a total of $1140 a month in savings.

On the 1-year anniversary of their loan they will be able to access the other $33,000 from the line of credit and pay off all the credit cards except for two, leaving a little over $24,000 of credit card debt. This would free up another $844 a month, for a total monthly savings of $1,984 per month.

If they roll all the monthly savings from the credit cards and their mortgage payment into one big payment, they will get the remaining debt paid off in 20 months from the date they got the reverse mortgage.

But if they took the initial monthly savings of $1,140 from the mortgage payment and the initial credit card payoff, and used that to pay towards one specific card, they would get everything paid off in about 16 months from when they got the reverse mortgage.

The combined monthly savings—between no more credit cards and no mortgage payment—is a little over $2,400 a month. If saving over $2,400 a month wasn’t exciting enough, starting in year 2, they are going to begin making monthly mortgage payments of $1,200 towards the reverse mortgage.

By making these payments, in 5 years they are estimated to have a $66,000 line of credit and their loan balance is estimated to be $67,000 lower.

Of course, at any time, if one of them were to pass sooner, they could stop making the payments altogether (as with any mortgage, they still have to pay property taxes and insurance, and continue to maintain the home).

And if either one was to pass before getting all the credit cards paid off, they would still free up $1,984 a month, which would easily replace the income that would be lost. Neither of them will be left in a financially devastating position when the other dies.

How awesome is this? The reverse is going to help keep them from being financially devastated if either one of them passes, and they are creating massive financial breathing room by getting all this debt paid off and consolidated into the reverse. And although they may or may not need it, there will likely be a significant amount of funds available in the line of credit to support them if financial shocks pop up.