Webinar with NAIFA and Curtis Cloke on July 18, 2019.
Join Curtis Cloke, Academy of Home Equity member and award-winning international speaker, educator and author for this exciting event focusing on methods to secure income in retirement! This webinar is put on by NAIFA – Iowa.
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.
The Journal of Retirement Fall 2015, 3 (2) 61-79; DOI: https://doi.org/10.3905/jor.2015.3.2.061
There is little doubt that many older Americans are not well prepared financially. The reverse mortgage is a financial instrument that can brighten their financial prospects and reduce the chances of an old age in financial straits. This article explains how reverse mortgages work. Recent research shows that strategically combining reverse mortgages and investment portfolios can significantly boost sustainable retirement income. Moreover, in the last three years the regulatory framework has been revised to develop further the market for these instruments. Reverse mortgages are increasingly recognized as a valuable financial planning tool. They are now seen as well suited for retirees—not only underfunded homeowners who turn to a reverse mortgage as a last resort, but also those who enter retirement well-funded.
Two major retirement challenges could be addressed through a simple innovation. First, long-term investors are struggling to meet their (lowered) target rates of return. Attempts to raise returns by investing in riskier assets only raises the risk of future underperformance. Second, individuals have insufficient retirement savings and are facing the prospect of a meager retirement paycheck. A new real estate sub-asset class, iHomes (Income from Homes), created by innovative funds and real estate managers, could address these twin challenges with attractive results for all parties. The solution rests in allowing retirees to tap into home equity to generate income, and for innovative investors to get rewarded for supplying capital for these transactions.
To dig into the article regarding home equity and reverse mortgage, click here.
by Marguerita M. Cheng, CFP® , RICP®, CRPC®, CDFA®
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.
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.
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.