For the record I'm averse to the reverse mortgage. But since I was asked to weigh in, I decided I needed to know why I feel this way.

I found a good tool to help me think about this

https://www.mortgagecalculator.org/calcs/reverse-mortgage.phpLet's compare 300K taken out in home equity which is not taxed to 300K taken out of stocks which will be taxed.

RM Costs: 2% to setup ($6000), 1.5% in insurance ($4,500), and 4% interest rate (~$12,000). So, that's $22,500 in year one. Then after 5 years, the balance on that RM would be about $370K.

Cost of selling 300K in stocks: Federal and state tax implication are about $56,000 initially. Plus, they will not get any stock growth. After 5 years, that 300K (assuming 6%) would have grown to about 400K.

What am I missing? If I'm not missing anything, then I shouldn't be judging RM the way I do. It appears like it's a solid tax strategy.