Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement

by Wade Pfau

This book provides an up-to-date understanding about reverse mortgages and how to use them as part of a complete and responsible retirement plan . Those who understand whether and how to fit a reverse mortgage into their retirement plan will have an important edge in achieving a financially secure retirement . This book is special as I do not work in the reverse mortgage industry and am not trying to sell you a reverse mortgage. Rather, I am a Professor of Retirement Income and director of the Retirement Income Certified Professional® designation for financial advisors. I am also the Retirement Researcher. These roles require me to be agnostic and to search for the best from different retirement income styles and tools. This is what led me down the path of studying reverse mortgages and the role they can play in well-constructed and thoughtful retirement income plan. My perspective is on how to build strong retirement plans, and this is the perspective I bring to reverse mortgages. Reverse mortgages have been surrounded by negativity. They were often mentioned alongside phrases like "last resort," "out of money," and "bad choice." My attention was drawn to reverse mortgages to give them an in-depth study. I concluded that reverse mortgages are not inherently a bad idea, though they are often misunderstood and not used in a most beneficial way. I realized that reverse mortgages---when used correctly---can provide an added layer of security for retirees and allow them to enjoy retirement more by having greater flexibility for their assets. Opening a reverse mortgage earlier in retirement and using it in a strategic manner is generally more effective that treating a reverse mortgage as a last resort option only to be considered when all else has failed. After providing an overview of retirement income planning, which sets the context for understanding the potential role of reverse mortgages, I will give you a firm understanding about the basics for how reverse mortgages work. You will understand why they work better when interest rates are low (unlike every other retirement tool), the potential for line of credit growth, and their ability to help manage sequence of returns risk for investment assets. Then I dive into their flexibility and many potential

Genres: Finance, Nonfiction

154 pages, Paperback

Published February 6, 2018

About the author

WADE D. PFAU
PhD, CFA®

Professor of Retirement Income

RICP® Program Director

Co-Director of the New York Life Center for Retirement Income

Areas of Expertise:
Annuities, Financial Planning, Investments, Life Insurance Planning, Life Insurance Practices, Portfolio Management, Retirement Planning

BA, University of Iowa
BS, University of Iowa
MA, Princeton University
PhD, Princeton University

Reviews

[Sukesh Shekar · Rating 5 out of 5]

the most insightful source on using housing wealth as part of your retirement

35 million households are 62 or older. Less than 1% use this gem called a HECM. It can increase retirement length, lifestyle, liquidity, and legacy by introducing a new asset class into your portfolio.

My favorite tips were using it to reduce (income) taxes, delay social security and reduce cash reserves with a coordinated portfolio strategy.

I you won’t accept a portfolio that 100% stocks, why do you accept a portfolio that 0% home equity?

[Diana · Rating 5 out of 5]

An objective professional look at reverse mortgages under current law. Bust several myths about why have been denounced in the past. Practical guidance backed up by Dr. Pfau’s research and others.highly recommend reading this book before or early in retirement or as part of understanding retirement income sources. Well-researched and written.

[Linda Leitz · Rating 4 out of 5]

Pfau is an expert on retirement funding. He debunks the opinion of reverse mortgages as a consumer ripoff and gives solid research on how they are structured, as well as effective use of reverse mortgages in retirement funding. The academic research details do not make for light reading. But the conclusions are important for financial professionals who want to give objective advice.

[Terry Earley · Rating 2 out of 5]

Short, informative read. Plenty of deep detail, written mainly for financial professionals.

[Dave · Rating 4 out of 5]

Good intro to how reverse mortgages work, beyond the mostly negative hype from an author that appears to have no vested interest in promoting or villifying them.

[Laura Power · Rating 4 out of 5]

Wade Pfau provided an in-depth and alternative look at reverse mortgages that explains how the use of them may work in some financial income plans. I especially liked the first chapters on financial income planning and will probably incorporate it in our own plan. I would recommend this book to someone looking to either provide a legacy or provide extra income that is trapped in your home.

[M31 · Rating 3 out of 5]

Aunque este orientado al mercado USA, gran introducción a cómo utilizar de manera responsable esta herramienta financiera y, al igual que en How much can I..., Muy bien documentado matemáticamente y ampliamente explicados los mecanismos burocráticos y sus riesgos asociados.

[Linden · Rating 4 out of 5]

Excellent overview of the role of home equity in a retirement plan.

[Allison · Rating 4 out of 5]

If you are considering a reverse mortgage or have the misfortune of retiring right before a down market, this book is definitely worth your time.

[Jason Branning · Rating 5 out of 5]

Excellent summary of reverse
mortgages and practical uses for them. Dr. Pfau's assertions are thoroughly researched and offer helpful context for retirees thinking about a reverse mortgage.