Monthly Archives: May 2019

Finding A High-Quality Reverse-Mortgage Lender

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by Wade Pfau on May 30, 2019

A common question I receive regards how to find a trustworthy reverse-mortgage lender. This is not necessarily easy for those beginning the process with little more to rely on than an Internet search engine. A starting point may be with personal referrals from your financial advisor, or from friends or family who have felt satisfied with their lenders. I am also willing to help readers find the names of local lenders from reputable companies if you write to me providing your city and state. I am not compensated by reverse-mortgage lenders for giving such referrals.

Full article may be found here.

The Academy of Home Equity in Financial Planning focuses on smart use of housing wealth

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by Jessica Guerin on May 16, 2019

As defined benefit plans and pensions become a thing of the past, researchers continue to extoll home equity’s critical role in retirement income planning.

For some time, a group of academics and financial planning professionals have sought to spread that message, forming the Funding Longevity Task Force to drive this mission and working in partnership with the American College of Financial Services.

Now, that task force has a new name and a new academic institution to back it. Full article may be found here

Livable Community Indicators for Sustainable Aging in Place

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Livable Community Indicators for Sustainable Aging in Place cover image

Research for this report was conducted by Amanda Lehning, PhD, Postdoctoral Fellow at the University of Michigan School of Social Work, and Annie Harmon, PhD Candidate, University of Michigan School of Public Health in collaboration with the Stanford Center on Longevity.

Aging in place is the ability to remain in one’s own home or community in spite of potential changes in health and functioning in later life. Aging in place has received an increasing amount of attention in recent years. This is due to a number of factors, including the aging of the population, a potential increase in chronic disease and disability in future cohorts of older adults, and an inadequate U.S. long-term care system. Furthermore, a survey by AARP in 20031 and another survey by the AdvantAge Initiative in 20042 demonstrated that an overwhelming majority of adults would like to remain in their own homes for as long as possible.

Down load full PDF here

Funding Longevity Task Force Gets New Name and Home, Adds Karin Hill

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by Chris Clow on May 14, 2019

The organization previously known as the Funding Longevity Task Force, which had recently moved out of the American College of Financial Services, has found a new home with the University of Illinois at Urbana-Champaign (UIUC), along with a new identity created to more closely align with the academic nature of its mission.

Full story here

Integrating Home Equity and Retirement Savings through the “Rule of 30”

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Figure 3: Ratio of initial home value to initial portfolio value

by Peter Neuwirth, FSA, FCA; Barry H. Sacks, J.D., Ph.D.; and Stephen R. Sacks, Ph.D.

This paper examines the effect of using reverse mortgage credit lines to supplement retirement income by two types of retirees that have not been addressed in the previous literature: (1) those whose retirement savings are significantly below those of the mass affluent; and (2) those who are “house rich/cash poor.”

Results of this analysis demonstrate an important contrast with the results of the earlier literature; specifically, the greater percentages of home value, when coordinated with the retirement savings portfolio, resulted in substantially greater percentages of the portfolio that can be drawn.

This paper suggests a new alternative to the 4 percent rule that can guide planners and retirees toward an optimal cash withdrawal strategy. This new rule takes into account the total of the retiree’s retirement savings plus his or her home value.

The quantitative analysis in this paper uses the same spreadsheet models and strategies first presented in the Journal by Sacks and Sacks (2012). This paper builds on that work by extending the analysis to a broader range of retirees.

Full paper here

Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income

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by Barry H. Sacks, J.D., Ph.D., and Stephen R. Sacks, Ph.D.

Figure 1: Cash flow survival propability chart

This paper examines three strategies for using home equity, in the form of a reverse mortgage credit line, to increase the safe maximum initial rate of retirement income withdrawals.

These strategies are:

  1. the conventional, passive strategy of using the reverse mortgage as a last resort after exhausting the securities portfolio; and two active strategies
  2. a coordinated strategy under which the credit line is drawn upon according to an algorithm designed to maximize portfolio recovery after negative investment returns,
  3. drawing upon the reverse mortgage credit line first, until exhausted.

Full paper here.

Reverse Mortgage

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by Marguerita M. Cheng, CFP® , RICP®

For homeowners over the age of 62, money may be tight due to a turbulent economy, greater longevity, and rising health care costs. And let us not forget the roller coaster ride called the housing market. One way to lessen the unexpected shocks that can jeopardize a comfortable retirement is to consider acquiring a reverse mortgage.

PDF of full article may be found at http://blueoceanglobalwealth.com/pdf/reversemortgage.pdf