How to Recession-proof Your Retirement Have a Mortgage and are age 62+? Consider a Reverse Mortgage

February 16, 2020

Economists Are Gloomy!? Many feel a recession is coming.

Wharton Business School’s Olivia S Mitchell recently addressed the challenges of retirement, especially for retirees. Key steps: First, “try to put together a summary budget” and “make sure you have an emergency fund.”

Academy member Tom Davison discusses the benefits of reverse mortgages for retirees and the various ways they are beneficial for consumers.

Find the full article here.

How to create a retirement ‘paycheck’

Posted January 3, 2020

Your expenses don’t end when your paychecks do, but creating a reliable income stream in retirement can be tricky. The right choices can result in sustainable income for the rest of your life. The wrong choices could leave you uncomfortably short of cash.

In fact, retirement includes so many important, potentially irreversible decisions that most people could benefit from a few sessions with a fee-only, fiduciary financial planner. (Fiduciary means the advisor is committed to putting your interests ahead of their own.) These ideally would start about 10 years before retirement. Understanding some key concepts could make those discussions easier — or keep you from making serious mistakes if you take a do-it-yourself approach.

Find the full article here.

Exploring the Retirement Consumption Puzzle

by David Blanchett, CFP®, CFA

Wanting to learn more about consumer spending in retirement? This article discusses the following topics:

  • Empirical research on retiree spending has noted a “retirement consumption puzzle,” where retiree expenditures tend to decrease both upon and during retirement. This decrease in spending is inconsistent with general economic theories on consumption, which suggest individuals seek to maintain constant consumption over their lifetimes.
  • Government data on consumption was analyzed in this study to understand how retiree consumption actually changes over time.
  • The results of the analysis suggest that although the retiree consumption basket is likely to increase at a rate that is faster than general inflation, actual retiree spending tends to decline in retirement in real terms. This decrease in real consumption averages approximately 1 percent per year during retirement. 
  • A “retirement spending smile” effect is noted. This finding has important implications when estimating retirement withdrawal rates and determining optimal spending strategies.

Propriety Reverse Mortgage Products Could Eclipse FHA’s HECM Program in 2019

Written by Jamie Hopkins on July 2, 2019

The reverse mortgage market world heads in reverse away from the government created Home Equity Conversion Mortgage (HECM) and towards new propriety products. This is an encouraging sign because any healthy market needs competition, innovation, and variety. However, recently HECM program has been the driving force behind the reverse mortgage world, leaving many without an ideal solution to utilizing home equity as part of a sustainable retirement plan.

The article can be found here.

Busting Three Half-Truths About Reverse Mortgages

By Jamie Hopkins on June 24, 2019

Hear from Jamie Hopkins in this Forbes article regarding the public’s opinion on reverse mortgages: “A few years back, I conducted and published research in the Journal of Financial Planning that showed Americans don’t understand reverse mortgages. In fact, respondents scored below 50 percent on a 10-question true-false quiz.

One possible explanation for the poor performance is a lot of misinformation floating about. A recent USA Today article titled “Considering reverse mortgages? Better to reverse course on this risky course” confirms my belief. The article contains many half-truths and misunderstandings and projects a negative connotation of reverse mortgages onto the reader.””

Reverse Mortgage Lenders Pivot as Sales Falter

By Greg Iacurci on May 24, 2019

“The reverse mortgage market is evolving for the first time in a decade, as the industry pivots to address sagging sales and what it sees as a new opportunity presented by the number of baby boomers retiring.

Reverse mortgages are a type of loan that allows seniors to tap their home equity, as a lump sum or line of credit, without having to make out-of-pocket payments. The market has been dominated by a single product, a home equity conversion mortgage, which is insured by the federal government and sold by approved lenders. “

Full article can be found here.