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

HOUSINGWIRE logo

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

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

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

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

Reverse Mortgage

Screen shot of PDF

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

Understanding Reverse Mortgages: An Interview with Shelley Giordano

Tools for Retirement Planning

SOA research has shown that non-financial assets are the biggest part of retirement assets for many middle American families. The largest part of non-financial assets by far are home values. Housing is the largest item of spending for older Americans, and housing costs vary greatly by geographic area and type of housing. Reverse mortgages offer a way to use some of the value of the home while still living in it. The SOA post-retirement risk research has indicated that few retirees are taking into account home values in their retirement planning. The 2015 focus groups indicated low interest in reverse mortgages. People thinking about planning have been asking the question: how do we take housing values into account in retirement planning? What are the options? How do we evaluate them? This interview with Shelley Giordano provides information about reverse mortgages and how they are being used today.

Full story at https://toolsforretirementplanning.com/2017/05/06/understanding-reverse-mortgages-an-interview-with-shelley-giordano/

How Does the Line Of Credit for a Reverse Mortgage Work?

by Wade Pfau, Ph.D., CFA

Retirement Researcher Logo

Originally published at Forbes

A mortgage’s effective rate is applied not just to the loan balance, but also to the overall principal limit, which grows throughout the duration of the loan. How the effective rate is applied may sound technical, but it is an overwhelmingly important point to understand in order to grasp the value of opening a line of credit as early as possible.

Full story at
https://retirementresearcher.com/how-does-the-line-of-credit-for-a-reverse-mortgage-work/

Does Your Retirement Plan Account For Your Own Cognitive Decline?

by Wade Pfau, Ph.D., CFA

Retirement Researcher Logo

With retirement, it is important to consider how declining cognitive skills associated with aging will make it increasingly difficult to self-manage your investment and withdrawal decisions. For households where one person handles money matters, surviving household members will be especially vulnerable to making mistakes when they outlive the family financial manager. Developing a strong relationship with a trusted financial planner can help with both of these matters.

Full story at
https://retirementresearcher.com/does-your-retirement-plan-account-for-your-own-cognitive-decline/