The Wild, Wild West of Retirement Planning

WSJ says: “Using your nest to help with your nest egg…”

What used to be viewed as the “Wild Wild West” of retirement planning (reverse mortgages) has become a more cost-effective option for senior homeowners looking to supplement a comfortable retirement and take advantage of the equity their home has acquired throughout their lifetime.

In an article, published by The Wall Street Journal, entitled “Advisers Reverse Thinking on Reverse Mortgages,” author Tom Lauricella describes how the reverse mortgage program went from being the red-headed stepchild of the mortgage broker to a possible retirement planning technique for seniors.

In truth, the most ample financial asset homeowners have at their disposal is their home. However, because their money is tied to the home’s equity, it’s difficult to consider the home as a source of income.

The reverse mortgage gives senior homeowners an opportunity to do just that. 

As a non-recourse loan, insured by the Federal Housing Administration, senior homeowners never owe more than the value of their home. If the loan amount rises above the current marketplace value of the home, the borrower (or their heirs) aren’t financially responsible for the difference.

If used properly, the reverse mortgage can mean the difference between a comfortable, care-free retirement and working part-time as a retiree in order to maintain your current living situation. 

Reverse Mortgages can be set up as a lump sum, tenure payments, or a line of credit. One of the advantages of the tenure payment is that, when set up on a monthly basis, over a period of many years, a homeowner could receive more money in payouts than the house is worth at the time of the loan.

Harold Evensky, a financial planner in Coral Gables, Fl., has been adamant in supporting the “Standby” Reverse Mortgage (HECM Saver) line of credit option because it allows senior homeowners to tap into their line of credit when markets are down and save when markets are up.

***In addition, the borrower does not have to repay the loan right away, the unused portion of the loan does not accumulate interest, and the line of credit is tax-free.***

Evensky also supports the “Standby” Reverse Mortgage as a Potential Solution to Reverse Dollar Cost Averaging.

Interested in a reverse mortgage program? There are many options available to you with a reverse mortgage and plenty of ways to use it during retirement. Give PS Financial services a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we’re just here to help.