Blog Entries by George S. Tomko, Reverse Mortgage Consultant, MetLife Bank NA

An Idea for Wealth Advisors: Including a Reverse Mortgage as a Part of a Holistic Financial Plan

I would like to advance a new idea; introducing a HECM Reverse Mortgage as one component of a holistic financial plan. By definition, home equity should be included for the plan to be considered truly holistic. Here are specific ideas for Financial Planners on how a reverse mortgage might function in this capacity:

  • STRETCHING A RETIREMENT PORTFOLIO – Fidelity investments, the largest provider of 401K’s with 11 million participants and almost 16,500 employer sponsored plans states (5/11) that among those who are 10 year continuous participants, their average balance is $191,000. For those in the same category over 55 their average balance is $233,000. Consider the impact of factoring $50,000, $100,000, or $300,000 of home equity into an individual’s financial plan?

  • PORTFOLIO RECOVERY STRATEGY - For those who lost significant value in the Bear Market of 2008-2009, these same proceeds described above could have been employed as capital to purchase equities while “on sale”. Unlike purchasing securities on margin, repayment is not dependent upon performance of the underlying investment. Risk is mitigated by the fact that payments are not due until both borrowers die, the property is voluntarily sold, or a condition of the loan is violated.

  • A WEALTH BUILDING TOOL – For investors between the ages of 62 and 70 1/2, with qualified accounts, who otherwise plan to begin taking distributions at age 62, the Reverse Mortgage can function as a wealth building tool.

  • SOCIAL SECURITY DEFERRAL STRATEGY - Integration of Reverse Mortgage proceeds as part of a Social Security Deferral Strategy. The objective; creating a higher lifelong income stream.

  • INCREASED LIQUIDITY – A means for higher net worth individuals/couples to better manage their investments by minimizing the need for liquidating investments at inopportune times.

George Tomko is a licenced loan officer in the state of Ohio and Reverse Mortgage Consultant at MetLife, having entered the financial services industry following a thirty-five year career in the computer industry. Visit George at https://www.mlbreversemortgage.com/gtomko

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