THE REVERSE MORTGAGE – THE FINANCIAL PLANNING SWISS ARMY KNIFE
Some five years ago, in an early Shift Into Reverse blog, we addressed head-on the compliance concerns of financial advisors, underlying their reluctance to discuss with clients products they themselves were not licensed to sell (such as property/casualty insurance, long term care policies – or reverse mortgages. Your function, we suggested to advisors, lies in pointing out the possibility that such products might satisfy a specific need, then recommending that the client seek the advice of a specialist
Today, for both advisors and clients, reverse mortgages have been moving ever-higher on the list of “need-to-know-about” topics. “Over the past 15-20 years, the industry has seen a significant increase in consumer protections,” HECM World explains.”The best originators approach conversations as advisors, positioning themselves around solutions rather than products.” According to the National Reverse Mortgage Lenders Association, reverse mortgages jumped 6.23% in 2025. Why the increase? G. Brian Davis suggests a number of reasons:
- Seniors outnumber children in nearly half of U.S. counties.
- Home prices skyrocketed over the past five years, supercharging many seniors’ home equity.
- Inflation has left many retirees “house rich and cash poor”.
- A slowing labor market has impacted post- retirement income supplementation
- ¾ of senior Americans said they want to age in place, which translates into the need for home modifications to caregivers.
Just some of the many solutions we’ve chronicled in this blog include:
- Mitigating sequence of returns risk for retirees (in case markets drop in the early years of retirement)
- Establishing a Growing Line of Credit: The unused portion of a HECM (Home Equity Conversion Mortgage) line of credit grows over time, regardless of home value fluctuations, giving the homeowner access to an expanding emergency fund.
- Delaying Social Security: Client can draw on reverse mortgage proceeds to cover living expenses in early retirement years, allowing your Social Security benefits to grow to their maximum potential.
- Funding Healthcare & Long-Term Care: Proceeds can be utilized to pay for in-home care, long-term care insurance premiums, or sudden medical expenses.
- Financing the tax on a Roth conversion.
- Funding for aging-in-place remodeling of property.
- Replacing expensive riders on Long Term Care Insurance.
- Funding grandchildren’s education costs or business startups.
As Wade Pfau, PhD, CFA, Professor of Retirement income at the American College of Financial Services notes: “The reverse mortgage option should be viewed as a method for responsible retirees to create liquidity for an otherwise illiquid asset, which in turn can create new options that potentially support a more efficient retirement income strategy (more spending and/or a greater legacy.”
Fact is, the reverse mortgage has developed into a “Swiss army knife” tool that can be used to fill an expanding variety of problem solutions for clients. Ironically, far from diverting client assets, in many cases, the solutions offered through reverse mortgages result in increasing Assets Under Management for the advisors.
https://mutualreverse.com/david-garrison
David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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