Huffington Post and the Mass Affluent

The Huffington Post’s article continues to elaborate in it’s commentary, why the “Mass Affluent” will naturally utilize funds from a Reverse loan as part of their overall financial plan.

Older people are not as concerned about health issues as they age, but they are concerned about out living their money.  Wisely using money from a Reverse mortgage instead of a traditional line of credit  ( where they would be obligated to make payments AND receive less money than they would from a Reverse loan.) makes more sense.

Here is the remainder of a summary of the article from the Huffington Post.  The summary was written by  Jason Oliva

“This group, as defined by Huffington Post, has $750,000 to $2 million of net worth at retirement and are people who typically have “almost enough money to live comfortably.” Additionally, it’s not uncommon for these individuals to have $750,000 to $1 million in a 401(k) and another $750,000 to $1 million in home equity.

Using a reverse mortgage also goes against what traditionally has been the public’s perception of conventional wisdom—in that a reverse mortgage should be used as a tool of last resort, that home equity should be reserved until a person has exhausted all of his money.

However, the problem with this thinking, Sacks said, is that it does not take into account the volatility of the securities portfolio of the 401(k) account or the IRA.

“…[Y]ou can use the reverse mortgage credit line to fill those troughs when the securities portfolio is down and don’t draw upon the securities,” Sacks said. “If you draw from a reverse mortgage credit line and allow the portfolio to recover, then there’s a far better chance there will be money flowing through a 30-year retirement.”

For those with less wealth stored for retirement, a reverse mortgage can still help, but not as significantly as those considered “mass affluent.”’

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