Should we tap our home equity?

Q: We are both newly retired and living on one Social Security check and investments. Would it be ridiculous to borrow on our already mortgaged home? In doing this, we would be getting a tax break and invest the amount not needed. We would use that amount borrowed to supplement our monthly income in place of the drawing down our investments. Common sense tells me that this is not a good idea. Do you think it's crazy?

A: I recommend listening to your common sense. Using home equity as a piggy bank to finance living expenses is something best saved for when you are in your 70s or older and have no other options. Borrowing against your home equity to make investments is a high-risk strategy I don't recommend, especially not to retirees. You don't say how old you are, but I assume that one of you is too young to collect Social Security. If you are concerned about the adequacy of your investments to last you through retirement, you've probably retired too soon. Working a few extra years or continuing to work part-time in retirement can make a huge difference in the adequacy of your retirement income.