This new type of reverse mortgage would help retirees generate much more income

Reverse mortgages can be a powerful financial tool in retirement — especially as more Americans age in place. But the product’s design today isn’t meeting many borrowers’ needs.

By design, reverse mortgages are meant to make retirement easier — and keep people in their homes.

Nelson Haynes, who worked at Deering Savings & Loan in Portland, Maine, is traditionally credited with creating the first reverse mortgage back in 1961. He wanted to help the widowed wife of his high school football coach stay in her home after her husband died.

In that era, “people observed that there were a lot of widows,” said Martin Neil Baily, a senior fellow in economic studies at Brookings and the former chairman of the Council of Economic Advisers under President Clinton.

“It was a time when a lot of men had pensions, and when the man died, the pension died as well. So these were women that didn’t have anything much to live on, but maybe they were living in a house that was quite valuable,” Baily said.

https://www.marketwatch.com/story/how-to-create-a-better-reverse-mortgage-11616167736

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.

Academic Acceptance for Reverse Mortgages in Retirement Income

by Wade Pfau, Ph.D., CFA

Retirement Researcher Logo

Originally published at Forbes

In a sign that the time had finally come for the idea of coordinated spending from a reverse mortgage, Harold Evensky, Shaun Pfeiffer, and John Salter of Texas Tech University published two articles—beginning with the August 2012 issue of the Journal of Financial Planning—investigating the role of a standby line of credit. They developed conclusions quite similar to the Sacks brothers without knowing of their work.

Full story at
https://retirementresearcher.com/academic-research-and-other-uses-for-reverse-mortgages/