The practice, almost without exception, is to deliver HECMs as a stand-alone. HECM reverse mortgage lenders are barred by HUD rule from delivering HECMs in conjunction with any other financial instrument. And every annuity provider we have queried has an internal rule that prohibits annuity sales when the funds used for the purchase have been obtained from a reverse mortgage.
The rationales for these restrictions are flimsy, and their cost to the retirees who are affected by them is enormous.
COVID-19 created major new health risks for Americans at all ages and, at the same time, had a major impact on the economy and daily life, exacerbating a wide variety of retirement risks. The retirement system faced major challenges before the pandemic, but the pandemic and its consequences may change the way people look at retirement issues. This article reviews how COVID-19 changed the economic environment, the work environment and the situation for retirees. It provides insights into employer responses to date and a discussion about what they might do in the future. Organizations that make major changes in employment strategies will also need to revisit their retirement benefits strategies. This article further provides a discussion of retirement risks based on recent Society of Actuaries (SOA) research and includes COVID-19 impacts on the risks. It brings together consideration of retirement risks, the environment before COVID-19, changes in that environment and possible future directions for retirement benefits. In 2020, SOA released a new version of its “Post-Retirement Risk Chart” and several reports on retirement risk and COVID-19. These reports were also used to inform this article.
Many people experience cognitive and/or physical decline as they age. Their first source of support when they need help is often the family, including their adult children. Caregiving adult children are often employed, and helping with the needs of their parents or other family members can impact their ability to perform their own jobs. Society of Actuaries (SOA) research provides insights about the challenges facing aging Americans and the impact these challenges have on their adult children. This article will highlight implications for employers and present ideas for helping employees deal with these issues as part of their financial wellness programs.
By Jamie Hopkins and Dr. Craig Lemoine on February 10, 2021
The Academy for Home Equity in Financial Planning at the University of Illinois at Urbana-Champaign believes that certain retirees can have a more secure retirement when home equity is used prudently. The Academy has just released compliance guidance around home equity and financial planning designed to help financial service companies update their language, policies, and procedures, many of which no longer follow best practices in the industry.
By Daniel Hunt, Lisa Shalett, Zi Ye, and Stephanie Wang on March 31, 2020
The answer to the question, “How prepared are you for retirement,” depends a lot on whether you look holistically at the balance sheet, including home equity, or just at the portfolio and income sources like Social Security. When home equity is ignored, that can cause households to make suboptimal decisions, such as forgoing longplanned spending it could afford or taking more investment risk than it’s comfortable with. When a questionable decision like that encounters the kind of market downturn we are currently experiencing, it can do serious damage to household ﬁnances and well-being.
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.
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.
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.