Reverse Loan Strategies

A strategy is generally a method that one will use to gain the most benefit in a given situation.   It could be in sports or at work or in a social environment and it certainly is used in war, but here I am referring to a recent article that suggests various strategies in planning retirement.

One is using a Reverse loan to extend money and funds that an older person may have accumulated over their working years.   And a recent “paper” discusses these in regards not only to the aging population but to Financial Advisers as they work with their clients in not only “preserving” their wealth, but how to make it last for their lifetime.

I am going to share a summary of the article and even the summary is quite lengthy for here, so I will share it in four posts.

New Paper Spells Out Reverse Mortgage Strategies for Financial Planners

“A recent paper published in The Journal of Retirement offers a comprehensive catalog of the various strategies in which a reverse mortgage can be used in retirement planning today, detailing the effectiveness of these loans in increasing portfolio longevity and spending power for retirees.”

The article—authored by Tom Davison, a reverse mortgage blogger and financial planning partner emeritus at Summit Financial Strategies, Inc., and Keith Turner, a reverse mortgage advisor with Retirement Funding Solutions—mainly addresses financial planner working with clients who have an interest in reverse mortgages.

In doing so, Davison and Turner frame the paper around a slew of research from established reverse mortgage researchers such as John Salter, Harold Evensky, Shaun Pfeiffer, who have studied the “standby” reverse mortgage line of credit strategy; as well as Wade Pfau and Barry Sacks, whose respective research has also focused on the use of a reverse mortgage line of credit and the synergies it can produce when used as part of a comprehensive retirement planning strategy.

“Today, there is an evolving understanding of reverse mortgages as a valuable financial planning tool,” write Davison and Turner. “Reverse mortgages are now seen as well suited for retirees—not only homeowners who are underfunded and turn to a reverse mortgage as a last resort, but also those who enter retirement well-funded.”’

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