How to use Reverse Mortgages to Secure Your Retirement – Wade Pfau

Wed, May 20, 2020 11:00 AM – 12:00 PM PDT

In the early days, reverse mortgages were generally treated as a last resort option after other resources were depleted, or as a way to obtain quick access to a large lump-sum of assets. This is not the appropriate way to think about reverse mortgages in a retirement income plan, especially in light of recent research. 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).

After providing an overview of retirement income planning, which sets the context for understanding the potential role of reverse mortgages, this presentation explains the basics for how reverse mortgages work. I then provide an overview of potential uses for a reverse mortgage, while focusing on ways to coordinate the line of credit use with distributions from the investment portfolio, and how to think about the reverse mortgage line of credit as a form of insurance to protect against market losses or declines in the home value. Financial advisors must pay attention to their client’s home equity, as this is a vital asset that can be used as part of a coordinated strategy to improve retirement outcomes.

About the Speaker:

Wade D. Pfau, Ph.D., CFA, RICP, is the curriculum director of the Retirement Income Certified Professional designation and a Professor of Retirement Income at The American College of Financial Services in King of Prussia, PA. As well, he is a Principal and Director for McLean Asset Management. He holds a doctorate in economics from Princeton University and publishes frequently in a wide variety of academic and practitioner research journals on topics related to retirement income.