Flexible Options

Miscellaneous Financial Planning Tools

Typically, the average retiree makes their financial decisions without even thinking about home equity or a reverse mortgage loan. However, on this page are several common retirement strategies and questions which could change how those decisions are usually made.

Medicare Gap from 62-65

Health insurance— after someone retires and no longer has their employer’s insurance - can be astronomically expensive. Even though your client may qualify for a pension or Social Security checks, they may end up paying a thousand or two in monthly premiums that forces them to go back to work or to pull more money out of bucket two, thus decreasing their longterm investment income. Those three years can cause shortfalls of 30-60,000 dollars. Home equity can be released with a reverse mortgage to cover some — or all — of those costs without dipping into the investment account nest egg. Many people want to work during this time period, but simply cannot find work in their field or are not able to physically continue working. They don’t have to take the risk of being uninsured or underinsured during this very vulnerable time.

Roth Conversions and NUA Options.

Oftentimes, it makes sense to do Roth Conversions from traditional IRAs or pay taxes in a lump sum during retirement on company stocks. When your client has a lower income or a special window for paying taxes on investment accounts, the question often comes up as to where the money will come from. No one disputes the fact that it makes sense to pay taxes at a 15% rate as compared to a 25 or 35% rate. If the tax bill must deplete the investment account and cause additional taxes, it typically doesn’t make sense unless there is another nontaxable bucket that the client can draw from. A reverse mortgage line of credit can often fill that need.

Delaying Social Security Draw Dates

This became a very controversial subject in late summer 2017 when the CFPB came out with a directive that said “Reverse mortgages should not be used to delay Social Security filing.”2 Almost immediately, several people from the financial planning community wrote articles for Investment News and Forbes Magazine that took an opposite viewpoint and disagreed with the math that was used in the CFPB examples. It is not the purpose of those of us in the reverse mortgage industry to advise on the best time to draw Social Security payments. We simply know that this is one of the single biggest sources of income for many retirees and many make the decision without consulting an advisor who is trained and familiar with all the options. Unfortunately, about 50% of retirees draw at ages 62 and 63 and because of projected longevity, should be waiting longer.3 Jamie Hopkins and Mary Beth Franklin both wrote their opinions on Social Security and reverse mortgage use. The links are provided here for your reference when analyzing your client’s Social Security plans.

2Source: http://files.consumerfinance.gov/f/documents/201708_cfpb_costs-and-risks-of-using-reverse-mortgage-to-delay-collecting-ss.pdf. 3Source: https://www.fool.com/ retirement/general/2016/04/19/when-does-the-average-american-start-collecting-so.aspx. Additional Sources: https://www.forbes.com/sites/jamiehopkins/2017/08/28/cfpbreleases-misleading-report-on-social-security-deferral-strategies/#381e37f3a1b0 Jamie Hopkins. http://www.investmentnews.com/article/20170906/BLOG05/170909967/reversemortgages-under-fire-again. Mary Beth Franklin. Note: This is not tax, legal or financial advice. Client(s) should consult a tax, legal or financial expert for their specific situation. The 65 and older population Is growing rapidly as baby boomers age. According to the U.S. Census Bureau, beginning in 2030, one in five

Americans is projected to be 65 and older.