ThinkAdvisor: Holistic Retirement Planning Should Include Reverse Mortgages


For retirement planning to be a truly holistic endeavor, it must include all of the possible options available to a client. These include the exploitation of social security benefits; tax strategies; investment accounts; long term care; estate planning; as well as the many reverse mortgage options available under the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) program.

This is according to Martha Shedden, president and co-founder of the National Association of Registered Social Security Analysts (NARSSA), in which she leads the development of the education and training program for all social security analysts. registered (RSSA).

Shedden offered his perspective in a column published by ThinkAdvisor.

“The traditional financial advisory service of calculating optimal portfolio allocations and focusing on measuring alpha (the return of an asset) and beta (the historical volatility of an asset) no longer provides a sufficient personal value for many investors today, explains Shedden in the article. “Beyond alpha and beta, gamma is the term used by Morningstar academics to measure additional income earned through holistic planning.

When it comes to serving comprehensive retirement financial planning, it becomes increasingly necessary to consider a number of factors and an increasing number of variables that become apparent as the client ages, says. she.

According to a 2013 study published by Morningstar, there was a 22.6% increase in retirement income using just five strategies: total wealth, including Social Security; withdrawal sequence strategy; the incorporation of additional income products, such as annuities; tax-advantaged decisions; and optimizing the allocation of assets over liabilities.

It had an inherent flaw, explains Shedden.

“Morningstar has not considered all possible strategies, such as the long-term impact of Roth conversions when tax increases are expected, nor has it considered the use of the many [HECM] options such as reverse home equity lines of credit, ”she writes. “But the additional or increased retirement income can be important when using a holistic approach to financial planning for retirement. “

However, Social Security should remain the proverbial first in line when considering financial planning for retirement, she said.

Read it column at ThinkAdvisor.

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