{Case Study} How One Couple Created a Back-Up Plan for Long-Term Care, Enhanced Their Savings Longevity and Funded Their Travel

Meet Jim and Carol

Married Couple (73/71) | Home Value $425,000 | $32,000 Outstanding HeLOC Balance

IRA’s/Savings $312,000 | Social Security $2900/month | Pension $1410/month

Jim and Carol pull $795 from their savings every month to supplement their income from Social Security and his pension.

Retirement Concerns

Jim and Carol’s advisor discerned their primary concerns based on a strategic core framework I crafted–the 5 L’s.
Longevity (Lo) | Lifestyle (Lf) | Liquidity (Lq) | Legacy (Lg) | Long Term Care (Lt)

(These retirement concerns are simple to understand and extremely powerful when combined with laser-focused questions. Download you copy here.)


Jim and Carol are concerned that their savings might not last as long as they do.  Their advisor has cautioned them that the $795 they’re currently drawing is the safe maximum they should be taking.  Honestly, Jim and Carol are uneasy with this tight restriction.


Long-Term Care

Due to a muscular degeneration condition, Carol has a hard time getting around.  She would’ve liked to purchase a long-term care policy, but the extra money never seemed to be available.



Jim and Carol would like to travel while Carol is mobile enough to do so, but their monthly budget is tight and doesn’t leave much room for spending on travel.


How Did Their Advisor Introduce Housing Wealth into the Conversation?

When I talk with advisors (like Jim and Carol’s), I find that there are three hurdles that must be overcome when seeking to effectively incorporate reverse mortgages into a retirement income conversation:

  1. Identifying clients who may benefit
  2. Introducing the concept strategically
  3. Passing the Baton to a qualified, Housing Wealth expert

In the Certified Housing Wealth Advisor Course I filmed at the American College, I take financial advisors step-by-step through this process and teach them how to generate more planning conversations with the new reverse mortgage.

Today, let’s focus on the second hurdle–introducing the subject.  How did Jim and Carol’s advisor talked with them about incorporating Housing Wealth in their retirement income plan to help mitigate their concerns?

Here’s an excerpt based on the conversation scripting I teach, including a customized Housing Wealth Illustration. (To receive a sample Illustration for your clients, click here.

“Jim and Carol, before we explore some possible solutions I have in mind, I’d like to share a little bit about my process.

I consider myself a AAA advisor, which means I believe in considering all available assets and all viable strategies to help my clients achieve their retirement goals.

Are you comfortable with me including your housing asset as we proceed?

Based on Carol’s age, the value of your home and current interest rates, the Home Equity Conversion Mortgage, or HECM, makes a portion of your home equity available to you.

First, it pays off your outstanding HeLOC balance of $32,000, which increases your monthly cash flow and lessens the amount you will need to draw from savings.  This will help your portfolio last as long as you do!

It also makes approximately $143,900 available to you in a line of credit.  You can pull from this reserve fund for expenses while Carol has the energy to travel.

The funds that remain in the line of credit will continue to grow over time.  Let me circle age 85 on the Illustration.  If you established it today and left it alone until Carol this age you would have $315,696 available to you.  Do you think that money would be helpful for long-term care expenses?

You can also convert the line of credit into monthly payments at any time in the future.  Look again at what I circled.  If you wanted the max amount of payout possible for 5 years, you could receive $6,020 a month.”

Did You See What Just Happened?

Did you notice the skillful way the advisor incorporated Housing Wealth as a possible solution for Jim and Carol’s situation? Were their longevity, long-term care and lifestyle concerns met with the HECM reverse mortgage?

Were able to reduce monthly expenses and draw on savings?  Provide a backup plan for long-term care expenses?  Enjoy travel while they still can?

The answer is yes.  The bigger question is: could they have accomplished those same outcomes without having a Housing Wealth conversation?

Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

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