Reverse Mortgage: A Home Equity Loan Designed for Retirement

The national picture shows many retirees not well prepared for retirement. A reverse mortgage can be a powerful retirement income planning tool, perhaps surprisingly for those clients of financial planners who are well prepared as well as traditional homeowners who are not as well prepared for retirement. Many families will find a reverse mortgage will substantially boost one or more of their three basic retirement financial goals: how much they can spend, having a contingency/emergency fund, and how much their heirs could receive.

After describing the basics of reverse mortgages, the talk describes research on improving retirement spending by evaluating various strategies by combining withdrawals from reverse mortgages and portfolios. For homeowners with an existing traditional mortgage, impacts of refinancing it with a reverse mortgage will be evaluated. Examples are provided of a variety of other applications, such as a homeowner interested in downsizing or moving to a new retirement home. A bibliography of existing research is included.