Over the last few weeks, there have been a number of articles and news shows discussing reverse mort-gages in a positive light.
Here is a brief summary of a couple of them:
The Wall Street Journal, 8/28/15 “Buying the Dips Doesn’t Work for Every-one”. This article discusses the philosophy of buying stocks at lower prices when
the market is down. But what to do if you are in the withdrawl phase of retirement and need to take money out.
“If those withdrawals coincide with falls in the stock market, you are effectively ‘selling on the dips and locking in all the losses,’ says Wade Pfau,
a professor at the Ameri-can College of Financial Services in Bryn Mawr, Pa., who studies retirement income.”
The professor discusses a few options like holding more cash as you age or delaying your Social Security to increase your income when you are old-er. He
also discusses using a reverse mortgage:
“Another possibility”, says Prof. Pfau, “is to consider taking out a line of credit under the Home Equity Conversion Mortgage program guaranteed by the
federal government, using it only during peri-ods when the value of your stock portfolio is declin-ing. This way, you reserve the right to borrow against
your home at reasonably competitive rates. But you would draw on the money only at times when you would otherwise have to lock in losses on your stock
Equities.com 8/25/15 “Financial Planning: How a Reverse Mortgage Can Help”
“In the past, reverse mortgages have been misrepresented as a loan of last resort for retirees with financial hardship, however, these loans are “versatile
financial plan-ning tools” for borrow-ers to leverage in a strategic way” states the article by Alberta Lim.
The article explores sever-al “tactical methods” where a reverse mortgage can be used in financial planning to enhance a person’s retirement years.
The article suggests reverse mortgages can help delay withdrawals from assets like Social Security benefits and pensions in order to help retirees maximize
their future payouts. It also echoes the Wall Street Journal suggesting that a reverse mortgage can help protect a retiree’s portfo-lio in a down market.