Utilizing Housing Wealth in Retirement Income Planning Can Help Minimize Retirement Risks

Author

Susan A. Pomfret - USA Mortgage

Posted on

Mar 26, 2024

Book/Edition

Florida - Southwest

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Susan A. Pomfret RICP®️ 

Did you know you can help your clients 55 or 62 and older reduce their monthly housing obligations? We all have enough concerns now, so wouldn’t it be of value to help your clients lower their stress about paying their monthly mortgage payment, credit card bills or installment loans? Perhaps you have baby boomer clients who are helping their elderly parents financially? Senior housing wealth has reached over $13 trillion* and may offer financial relief.

By tapping home equity with a Home Equity Conversion Mortgage (HECM), those 62 and older can have flexible options. They can choose to receive HECM funds through a monthly payment, line of credit, initial draw, or a combination of methods. An even better feature is that no matter how they decide to take their funds at closing, they can change their payment plan at any time, as often as they need to throughout the loan.** Flexible options are very important as seniors navigate retirement, not only because their lives change as they get older, but also because they will have a tax-free*** safety net when they need it most, even for unexpected events.

For those 55 and older there are similar choices available with Portfolio Jumbo Reverse Mortgage Products. Though they are not available in every state, and have some restrictions on payment plan flexibility, these loans are still a good option to consider.

In 2014 the Financial Industry Regulatory Authority (FINRA) updated their Investor Alert about Reverse Mortgages, noting that recent changes to the program added additional safeguards for the borrower. They also stated “FINRA is issuing this Alert to urge homeowners thinking about reverse mortgages to make informed decisions and carefully weigh all of their options before proceeding. And, if you do decide a reverse mortgage is right for you, be sure to make prudent use of your loan.”

As with any financial product, clients need to rely on an experienced professional to educate them about the risks and benefits to ensure they are making an informed decision. You can learn more at ttps://www.finra.org/sites/default/files/InvestorDocument/p517004.pdf

There have been many studies that show how a HECM or Reverse Mortgage can help with Sequence of Returns Risks and Longevity Risk. I particularly like this article because it describes a coordinated strategy that is simple to implement https://toolsforretirementplanning.com/2016/08/20/sacks-and-lafaye-case-study/ 

In addition, Jamie Hopkins, Esq., LLM, MBA, CFP®, RICP® wrote a book titled Rewirement: Rewiring the Way You Think About Retirement! that I highly recommend, along with books and studies by Wade Pfau, Ph.D., CFA.

Finally, think of HECMs and Reverse Mortgages as part of the financial planning/ retirement income planning process. They can be part of discussions with your clients about deferring social security, paying for health care and long-term care costs, making home modifications, keeping their current home, or buying a new one. They may offer a useful tool when gray divorce is the challenge, and as mentioned above, they may protect against Sequence of Returns Risks.

About Susan A. Pomfret, RICP®. Susan was one of the first to originate HECMs in Rhode Island, starting in 1989. She began her mortgage career over 30 years ago. She is a familiar and respected face in the senior community, combining her professional experience with senior volunteer work. She served as Co-Chairperson of the Board of Directors for the Senior Agenda Coalition, Board of Directors member for the RI Chapter of the Alzheimer’s Association and was Co-Chairperson for Alzheimer’s annual fundraising auction. Her volunteer work with the National Reverse Mortgage Lenders Association (NRMLA) includes serving as an appointed member of the Government Affairs, State and Local Issues Subcommittee. She has lobbied at the RI State House, participated in many rallies, and testified on various senior bills and issues, both in RI and on Capitol Hill. She was chosen to assist in writing the first Certified Reverse Mortgage Professional (CRMP) test, was a frequent columnist for Senior Digest Newspaper and PrimeTime Magazine, and was a monthly co-host of the Senior Digest Radio Show on WPRO 620AM. Susan has been published in many national mortgage industry publications and was chosen to cover the 2005 White House Conference on Aging (WHCOA), as well as attend the invitation-only 2015 WHCOA Forum in Boston, MA. She co-founded of the RI Chapter of the National Aging in Place Council, is an appointed member of the Aging in Community Act Subcommittee (affiliated with the Lt. Governor’s Long-Term Care Coordinating Council) and is an appointed Alzheimer’s Ambassador RI – U.S. Representative. Susan holds a Bachelor of Science in Paralegal Studies and Certificate in Gerontology from Roger Williams University and Retirement Income Certified Professional (RICP®) Designation from The American College of Financial Services.  

*https://www.prnewswire.com/news-releases/senior-housing-wealth-reaches-record-7-70-trillion-301154029.

**The servicer will charge a $20 change fee each time they change the payment plan.

***Contact a tax professional.

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Local Services By This Author

Susan A. Pomfret RICP, USA Mortgage

Reverse Mortgages , Naples, Florida, 34104

At USA Mortgage, we are passionate about helping seniors achieve financial flexibility through Home Equity Conversion Mortgages (HECMs) and other Reverse Mortgage solutions. With a customer-focused approach and over two decades of experience, we provide tailored mortgage options designed to meet the needs of homeowners aged 55 and older.Our dedicated local Team are experts in HECMs/Reverse Mortgages, guiding you every step of the way with a seamless loan process. Whether youre looking to access your homes equity, refinance, or explore a HECM or Reverse for Purchase option, USA Mortgage offers a wide range of solutions to help you reach your financial goals.We pride ourselves on delivering a reliable, detail-oriented, and personalized experience. From the initial consultation toloan closing, our Team is committed to finding the right product that works for you, providing peace of mind and financial freedom. Trust USA Mortgage to be your premier home loan partner, empowering you to make the most of your retirement years.We offer a wide range of mortgage options to suit your specific needs and financial goals. From conventional loans to FHA, VA, and USDA loans, HECM and Reverse Mortgage loans. USA Mortgage has the expertise to help you find the perfect mortgage solution. Susan A. Pomfret, RICP has a career spanning several decades, she is proud to be one of the trailblazers in the reverse mortgage industry, having the honor of originating one of the first HECMs in Rhode Island in 1989 and has since dedicated her career to advancing the industry, playing a pivotal role in elevating companies to new heights. Under her leadership, she has transformed HECM closings, overseen vast teams, and engineered sales strategies nationwide.Susan's passion extends beyond just professional accomplishments; she is deeply committed to the senior community. This is reflected not only in leadership roles within senior-focused non-profit organizations but also in the dedication as a volunteer and advocate. She has been published in numerous mortgage publications, covered esteemed events like the White House Conference on Aging in 2005 and 2015, and was chosen to assist in writing the first Certified Reverse Mortgage Professional (CRMP) exam for the industry's trade organization, the National Reverse Mortgage Lenders Association (NRMLA).In addition to Susan professional endeavors, she holds a Bachelor Degree in Paralegal Studies, a Certificate in Gerontology from Roger Williams University and the Retirement Income Certified Professional Designation from The American College of Finance Services. Susan is driven by the mission to enrich the lives of our senior population and empower retirees to live a financially stress-free retirement.Contact Susan Pomfret, RICP at 401-595-7300 to schedule your free consultation.NMLS#1253876. Licensed in FL (License #LO125044)