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Financial Planners to Reverse Mortgage Lenders: Educate Us

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story

by Elizabeth Ecker Published in News, Reverse Mortgage

A panel of financial planning professionals shared insight with attendees of the National Reverse Mortgage Lenders Association conference in Irvine, California last week. By and large their message to reverse mortgage professionals was: education is paramount.

While some financial planners do understand the viability of reverse mortgage products and they ways in which they can work for clients, and even with the help of recent positive financial planning press on the products, there is still work to be done on the education front, they say.

“I was getting a lot of phone calls about reverse mortgages,” said Pat McClain, senior partner and founding principal of Hanson McClain Advisors of his early experience with reverse mortgages. “I initially had a negative attitude toward reverse mortgages. But I realized they weren’t the reverse mortgages of old; they actually help people if used correctly.”

McClain, who became one of the founders of Liberty Reverse, now advises clients on financial planning. While his mind was changed, there are still others who need help understanding how the products can work.

“In terms of clients’ perceptions, there is still a lot of work to be done,” says Jerry Clements, certified financial planner with Ameriprise. “For most there is a negative connotation when I talk to clients.”

But, Clements says, there are ways reverse mortgage professionals can work with financial planners to bring them up to speed. Some are working with reverse mortgage advisors already, others are not.

“A lot of us still have preconceived ideas. …hopefully over time with education [the reverse mortgage] could be something they integrate more as a tool to prevent portfolio failure,” he says.

While real estate professionals focus on location, location, location, McClain says, for financial planners, it’s education that counts.

“For us in the financial planning community, it’s education, education, education,” he says. “You may assume we understand how it works, but some do not have a clue. It’s a process. It may take years to develop the relationship, but if you do and there’s that trust, you will be top of mind. Our clients are asking about it and the more educated we are the more we can help our mutual clients.”

Looking ahead, McClain says, the reverse mortgage could be incorporated into financial planning calculators.

“Figure out as an industry how to bake calculators into financial planning software, so it shows up as a line item. It will make a difference in three to five years, whether they recognize it now, or not.”

Wall Street Journal: Without a Reverse Mortgage, Most Americans Won’t Make it Through Retirement

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Reverse Mortgage

Saturday’s Wall Street Journal article by Tom Lauricella minces no words: “Your financial adviser doesn’t want you to read this column.”

What would cause this venerable financial publication to introduce a piece in such robust terms?

Because, based upon research done by the highly esteemed Center for Retirement Research at Boston College:

Without making any changes to their savings and investment strategies, 74% of households would fall short of their income needs at age 62, and 47% would fall short at age 67, when individuals (born in 1960 and later) become eligible for full Social Security benefits.

By anyone’s standards, these are scary numbers.

This sobering data, fortunately, is not the whole story. The article goes on to state that when certain “levers” are pulled, seniors’ odds improve significantly.

By adding two factors – the aforementioned “levers” – to a retirement portfolio, research demonstrates that odds swing greatly in seniors’ favor.

So what are these two levers?  First is working longer. This cuts down the number of years spent in retirement, and adds savings to the retirement kitty. Demographic studies consistently show people are working significantly longer even compared to just a few years ago, and this trend looks poised to continue.

And the second lever? For many Americans entering retirement, or for those already retired, a Reverse Mortgage makes possible living out their retirement years with dignity and in financial security.

With the FHA-insured Reverse Mortgage, homeowners never give up title, cannot get underwater, never make a payment as long as they remain in the home, and never have to move.

Read the whole article at: http://alturl.com/jiu2o

CNBC Reports on Financial Planners’ Rising Interest in FHA Reverse Mortgage

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Reverse Mortgage

“Financial planners often don’t even understand [reverse mortgages] because the lessons they have learned (from other financial products) don’t apply,” said Barbara R. Stucki, vice president of home equity Initiatives at the National Council on Aging.

But advisers are now jamming them into their tool boxes. Financial planners who once shunned them as too costly and confusing are starting to see their value – especially as other cash sources dry up for retiring baby boomers.

“A reverse mortgage can be a perfectly good way to use your home equity,” said Stephanie Moulton, an Ohio State University public policy assistant professor and reverse mortgage expert who has worked a reverse mortgage counselor for American Association of Retired Persons.

“The danger is that boomers might draw down their equity and spend it on the wrong thing, like expensive vacations, and find themselves with none left at age 75 when they need it even more. But if you use reverse mortgages as part of a financial strategy, they can be a sophisticated product that fills a real need.”

How They Work

Reverse mortgages are offered to people who are at least 62 years of age. There are two main types set up under the FHA’s Home Equity Conversion Mortgage, HECM, and referred to by insiders as ‘heck ‘em.’ (The Federal Trade Commission has a reverse mortgage primer on its site.)

The “standard,” or traditional, reverse mortgage, gives you a stream of income for a number of years, usually as long as you live in your home. As with Social Security, though, there is no “means-testing” or upper income limit. The program can pay thousands of dollars per month on principle of up to $625,000. It is government-guaranteed and not taxable income, and it is not likely to affect Social Security or Medicare benefits. The older you are, the higher the payout.

Read the article at: http://alturl.com/qo9p2

How Much Money Will You Really Need In Retirement?

by ReverseLady, posted in FHA HECM, Reverse Mortgage

How Much Income Will You Really

Need in Retirement?

Erik Carter Erik Carter, Contributor
RetirementRetirement (Photo credit: Tax Credits)

When we meet with individual employees, one of the most common retirement questions we get is how much income they will need in retirement. Unfortunately, it’s one question we can’t answer for them.  For example, I may run a retirement calculation that projects your retirement income at $65k in today’s dollars at age 62. What I can’t tell you is whether that’s enough or whether you should save more or retire later. Financial planners typically say you need about 80% of your income before you retire but actual needs can vary considerably. Here are some questions to help you figure that out.