Conventional wisdom is not always wise

When it comes to The New Reverse Mortgage is conventional wisdom always wise?

Historically, home equity has been the “sacred cow” of retirement planning, only to be used as a last resort and not at all if possible. This ‘conventional wisdom” has created a generation of retirees who are “house rich but cash poor” and struggling to live a safe and secure retirement.

The New Reverse Mortgage

In the 21st century the retirement rules are different

The rules for retirement have changed and more experts and financial planners are finding that The New Reverse Mortgage may be the most efficient retirement planning tool available to most American families.

Related: The New Reverse Mortgage working as advertised

Efficiency, as economists explain it, is measured by the ability to spend more while preserving more legacy at the same time. Considering this principle, reverse mortgages can effectively help retirees accomplish both objectives, according to Wade Pfau, professor of retirement income at The American College in Bryn Mawr, Pa., and principal at McLean Asset Management in McLean, Va.

Americans today face many challenges in preparing for retirement. While some may have saved too little, others may not have saved at all. Even with substantial savings in IRAs and 401(k)s, most of us are ill prepared for the challenges of a retirement in a volatile economy that is likely to last 20-30 years.

Related: Choosing the right reverse mortgage lender

In research published last fall, Pfau expounded on previous findings from Barry and Stephen Sacks, which legitimized the effectiveness of using reverse mortgages as part of a coordinated retirement income plan, rather than as a last resort to be used only when a person’s investment portfolio has been depleted.

How effective is this new retirement strategy?

According to Pfau, if used prudently it has a 90% chance of success, while the conventional wisdom of using equity as a last resort has only a 70% chance of success. May not seem like much but in retirement we don’t have a huge margin for error.

Related: What to do when retirement doesn’t go as planned

“The conventional wisdom of how financial planners treat reverse mortgages hurts the retirement sustainability of their clients,” Pfau said. “The strategic use of a reverse mortgage can improve retirement sustainability and can allow for a larger legacy—it’s a more efficient strategy.”

Related: 25 retirement solutions with The New Reverse Mortgage

How do I know if a Reverse Mortgage is right for me?

If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.

Some of this information first appeared on

From the desk of Greg Cook; 951.265.4532​