For decades, retirees have relied on one key milestone when planning their future: the full retirement age for social security(FRA). But with new increases pushing that age to 67, many Americans are now facing a significant financial gap between when they need to retire and when they receive their full benefits. With the full retirement age hitting 67, instead of 66 and 10 months as it was previously, people born in 1960 won’t qualify for their full benefits until 2027, rather than 2026. (You can check your own full-benefit age by entering your birthdate into this Social Security calculator.) 

Many American plan to retire at 65, but studies show 62 is the median retirement age due to various circumstances. (https://www.cbsnews.com/news/retirement-age-in-america-62-claiming-social-security-early/) It is still possible to claim your social security benefit at age 62, with the risk of permanently reducing the monthly benefit by about 30% compared with waiting until hitting the FRA.

With living costs rising, investment volatility, and longer life expectancy, homeowners need flexible solutions that protect cash flow. One of the most powerful yet overlooked tools available at age 62 is a retirement mortgage, also known as a Home Equity Conversion Mortgage (HECM).

A retirement mortgage can strategically bridge the years between age 62 and the full retirement age for social security, helping older adults delay benefits, protect assets, and maintain independence.

Why the Increase in Full Retirement Age for Social Security Matters

Beginning in 2026, Social Security’s full retirement age will reach its final scheduled increase under the 1983 congressional reforms designed to strengthen the program’s long-term financial stability. Prior to this legislation, beneficiaries could claim full retirement benefits at age 65. The reforms introduced a gradual increase in the full retirement age, with the final phase of this adjustment taking effect in 2026.

Here’s the challenge:

• Millions of Americans retire, or need to stop working, before age 67
• Claiming Social Security early (as young as 62) results in a permanent benefit reduction of up to 30%
• Delaying until full retirement age increases lifetime income but requires an income bridge

That gap between early eligibility and the full retirement age for social security can strain savings, increase tax burdens, and reduce retirement stability.

A retirement mortgage helps solve that problem.

How a Retirement Mortgage at 62 Bridges the Gap

Opening a retirement mortgage at 62 allows homeowners to convert a portion of their home equity into usable funds, with *no monthly mortgage payment required.

This creates a flexible financial bridge that allows retirees to delay Social Security until they reach their full retirement age for social security, significantly increasing their lifetime benefit.

1. Provides Income So You Can Delay Social Security

Delaying benefits until the full retirement age for social security can dramatically increase monthly and lifetime payouts.

A retirement mortgage can offer the supplemental income needed to wait.

2. Eliminates Monthly Mortgage Payments

Eliminating a traditional monthly mortgage payment can improve cash flow immediately, making semi-retirement or reduced hours more feasible.

3. Protects Your Retirement Accounts

Instead of withdrawing from a 401(k) or IRA prematurely or during market downturns, retirees can draw from home equity temporarily. This avoids sequence-of-returns risk and helps keep long-term growth intact.

4. Offers Tax-Free Proceeds

Retirement mortgage proceeds are not considered taxable income.

This helps retirees:

• Protect Medicare brackets
• Keep taxable income lower
• Reduce unnecessary withdrawals before the full retirement age for social security

5. Creates a Growing Line of Credit

Opening the loan at 62 locks in a credit line that can grow over time, offering long-term financial security and a built-in hedge against inflation.

Why Opening the Retirement Mortgage at 62 Is So Strategic

Most homeowners wait too long to explore this option. But opening the retirement mortgage at 62 can:

• Increase available credit
• Provide more years of protection
• Strengthen cash-flow planning
• Support aging-in-place goals
• Offer flexibility if health or job circumstances change unexpectedly

The earlier you set it up, the more valuable it becomes, especially with the full retirement age for social security rising to 67 while the median age for retirement remains 62.

Who Benefits Most From This Strategy?

This approach is ideal for:

• Retirees planning to stop working before 67
• Homeowners who want to maximize Social Security benefits
• Those with significant home equity but reduced liquidity
• Anyone looking to age in place with more financial certainty
• Americans who desire a financial security

The Bottom Line

The increase in full retirement age for social security has changed the retirement timeline for millions of Americans, but it doesn’t have to diminish financial freedom.

A retirement mortgage opened at 62 can:

• Provide tax-free income to bridge the gap
• Eliminate monthly mortgage payments
• Protect investment accounts
• Help you delay Social Security for higher lifetime benefits
• Support a more comfortable and secure retirement

Used strategically, it becomes one of the most powerful financial planning tools available to today’s retirees; helping them maintain independence, protect wealth, and stay in control of their future.

The funds from a Home Equity Conversion Mortgage can be accessed in 3 different ways:

• A lump sum, one time payout
• A monthly payment to you set up for as long as you reside in the home
• A line of credit with growth potential that you can draw from as needed without any required monthly mortgage payments.

Freestone Mortgage Can Advise On Bridging The Funding Gap

As the full retirement age for social security changes to 67, you may want to consider how to keep your retirement plans on track while avoiding taking early retirement benefits. Setting up a monthly payment to you from your home equity could be one avenue to consider. At Freestone Mortgage, we advise retirees and those planning for retirement on how to deploy their home equity as a liquid asset. Call us today to see if this strategy may work for you.