Why The Announcement Of The Academy Of Home Equity Is Such An Important Development

By Jamie Hopkins, Esq., LLM, MBA, CFP®, RICP® on June 20, 2019

When it comes to retirement planning, discussions about downsizing, refinancing, making renovations to the home to support aging and reverse mortgages are ignored in most financials plans. This void is shocking since home equity is typically the largest asset that most Americans have as they near and enter retirement.

This gap in planning is why a new development at the University of Illinois Champaign-Urbana is so important. A group of researchers, thought leaders, planners, and industry experts, formerly of the Funding Longevity Task Force, have just joined Dr. Craig Lemoine at the University of Illinois Financial Planning Program. In the past, the group consisted of independent researchers, including myself, which is important to note as I discuss the new organization. The team formerly tested retirement income strategies and the role of home equity in financial plans. While much of the group’s research then focused on reverse mortgages, the academy is committed to investigate a broader study of home equity and retirement security.

For full article, click here.

Picture of Jaime P. Hopkins
Jaime P. Hopkins, ESQ., MBA, CFP®, LLM, CLU®, ChFC®, RICP®

Jamie Hopkins, Esq., LLM, MBA, CFP®, RICP®, is the Director of Retirement Research at Carson Wealth and a former professor of Taxation at The American College, where he helped co-create the Retirement Income Certified Professional® (RICP®) education program. Jamie strives to increase the retirement income security of Americans by delivering practical and trusted retirement research and education. His most recent book, “Rewirement: Rewiring The Way You Think About Retirement,” details the behavioral finance issues that hold people back from a more financially secure retirement. He has been selected by InvestmentNews as one of the top 40 financial service professionals under the age of 40 and was also selected by The American Bar Association as one of the top 40 Young Attorneys in the country. In 2017, Trusts & Estates Journal awarded Professor Hopkins the Distinguished Author Award for his article on the Department of Labor Fiduciary Rule. He holds his LLM in Taxation from Temple University School of Law and his J.D. from Villanova University School of Law.

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

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.

What You Should Know About Repaying a Reverse Mortgage

by Wade Pfau, Ph.D., CFA

Retirement Researcher Logo

Originally published at Forbes

Repayment of a home equity loan balance may be deferred until the last borrower or non-borrowing spouse has died, moved, or sold the home. Prior to that time, repayments can be made voluntarily at any point to help reduce future interest due and to allow for a larger line of credit to grow for subsequent use. There is no penalty for early repayment.

Full story at https://retirementresearcher.com/what-you-should-know-about-repaying-a-reverse-mortgage/