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Finance of America Reverse: Sophisticated 21st Century Planning - YouTube
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- Today's savvy investors are
looking for innovative ways
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of adding value to America's
sophisticated retirement plans.
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For growing numbers of
advisors and their clients,
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this now means choosing a reverse mortgage
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as part of the proactive
retirement strategy.
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In this news item,
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we're going to learn more
about the renaissance
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of reverse mortgages.
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(upbeat music)
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- [Reporter] The golden years are getting
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a bit more complicated
for 21st century retirees.
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Kristen Sieffert is president
of Finance of America Reverse.
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- For people retiring today,
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it's such a different
landscape than it used to be.
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With the majority of people
no longer having pensions.
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Some of the first generations of people
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that had to do 401ks on their own
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without very much direction,
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just got off to a slower start
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than many people in the past.
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Coupled with the fact
that people are living
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so much longer these days.
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- [Reporter] As Americans
face longer retirements,
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there is renewed urgency
to ensure they can fund
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the lifestyle they want,
preserve assets under management,
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and pay for long term care,
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while still having sufficient savings
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to cover rising healthcare costs.
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A reverse mortgage is
one tool that can help.
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- A reverse mortgage is for
people that are 62 and older.
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There are some products on the market
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that allow you to get
it at age 60 and above.
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And basically it allows
you to take the equity
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that you've built up in your home
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and turn it into cash flow
as a standby line of credit.
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And I'd also mention that
with a reverse mortgage
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there are no payments required.
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If a borrower chooses to make payments
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in order to protect
their equity, they can,
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but there's no payments required
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as long as they're living in the home
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and keeping up with the
obligations tied to the loan.
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- [Reporter] In the
U.S., senior home equity
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is valued at a staggering $6.8 trillion.
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Steve Resch, Retirement
Strategies' vice president
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for Finance of America Reverse,
explains how the market
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for reverse mortgages
includes affluent home owners.
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- The overall retirement
market is about 20 million
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when we look at mass affluent consumers.
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And those are your
consumers that have between
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a half a million and $1.5-2
million of invested assets.
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- Our homes are often our
largest purchase early in life.
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In retirement, these homes
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become one of our greatest assets.
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So as Americans prepare for retirements
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that can last 30 years or more,
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increasingly reverse mortgages
are playing a critical role
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in creating financial security
during our golden years.
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- Many firms won't even talk to clients
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that have less than
half a million dollars.
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But with a coordinated strategy,
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that portfolio could potentially handle
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all the draws needed to
get through retirement,
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but then at the same time
double, or even triple over time,
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now we've created a client
that is highly profitable
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to wealth management firms.
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- [Reporter] Phil Walker,
Finance of America Reverse's
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vice president of strategic partnerships
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considers how seniors at all income levels
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can put their homes equity to work.
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He calls it the coordinated strategy.
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- You literally just look
at the portfolio performance
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at the end of each year.
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If the portfolio performance is up,
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you take the next annual
draw from the portfolio.
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But in those years when
the portfolio performance
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is down, instead, you take the draw
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from the reverse mortgage line of credit.
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This gives the portfolio
some breathing room
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to rebound faster, right.
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It allows it to take advantage
of the up market times.
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- [Reporter] Dr. Barry Sacks,
an independent consultant
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in retirement income
planning explains further.
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- By coordinating the
draw from the credit line
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against the performance of the portfolio,
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you end up with a much better situation
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than if the retiree were to
simply draw from the portfolio
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until it's exhausted,
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and then as a last resort,
draw on the home equity.
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- So how can financial advisors
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incorporate reverse mortgages
into financial planning
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in such a way that it benefits
not only their clients,
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but also helps them grow
their own businesses?
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- The fact that you're greatly
increasing the longevity
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of a portfolio obviously
benefits the client,
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but it benefits the firm also.
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If that portfolio can potentially
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double or triple over time,
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now you have a client that's
gonna be with you forever.
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- Reverse mortgages have shifted away
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from a product of last resort
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to a cornerstone of savvy
retirees' wealth strategies.
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With the help of a well-informed
financial professional,
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Americans can tap into
rising home equities
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and get to work on that retirement
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they've always dreamed of.
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From San Diego, California,
I'm Brad Pomerance.
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