Optimizing retirement outcomes for your clients is every advisor’s goal. The 2 minute video below shows how HECMs can be used to create a deferral bridge. The mechanics are very simple:
- Establish a ReLOC (Reverse Mortgage Line of Credit). See more at www.ReLOC.net.
- Determine how much monthly or yearly income your clients will need to replace.
- Determine for how long they will need it.
- Draw from the ReLOC to subsidize some, all, or part of those funds to bridge the gap.
Clearly, it is easy to do, but is it the right thing for your client?
I cannot answer that without asking more questions, learning the specifics, and running some scenarios. Are the clients married? What are their life expediencies? How much do they have saved? What are their Core Concerns for retirement? Do they have any other Non-Correlated Assets to draw from during deferral? All of these questions and more must be answered to draw optimal conclusions.
What I do know without needing to ask further questions is that shortening the retirement draw period, planning for longevity, and increasing the lifetime inflation adjusted payouts that come with deferral should certainly be part of any legitimate retirement income planning conversation. Wouldn’t you agree?
To not discuss general longevity planning or delayed asset conversion strategies (Social Security, IRA, Pensions, and Annuities) is to limit the scope of comprehensive planning. All options, strategies, and tools should be weighted, evaluated, and discussed. HECMs are no different. They may not be the conclusion, but they must certainly be part of the conversation.
Video: A Quick Calculation of Using a HECM to Defer Social Security