Download - Reverse mortgage plan your future

Learn how utiLizing home equity can better your cLient’s financiaL position by:

• Eliminatingmonthlymortgagepayments

• Improvingaccesstotax-freecash

• Providingapotentiallylow-cost,non-cancelable,growinglineofcredit

• Protectingportfolioperformanceinadownmarket

• Offeringcreditrequirementsspecifictotheseniordemographic

:

Thomas Mastromatto #145824 phone 888-769-7023

DiscoVer the new

ReverseMortgage

Weappreciateandapplaud

thewayinwhichyouhave

putyourclientinsucha

financiallysecureposition.

You’veworkedhardwith

yourclientstoensureeach

onehasaviableandsecure

retirementportfolio,and

formany,thetimehasto

cometobegindisbursement

plansinaresponsibleand

sustainableway.Atthe

sametime,marketchanges,

economiccyclesandmany

otherexternalinfluences

havenegativelyimpacted

portfoliostocreatesome

futureuncertainty.Areverse

mortgagecouldbethe

perfectfinancialtoolto

provideadditionalsecurity

andimproveportfolio

longevity.Thenewreverse

mortgagehasavariety

ofoptions,lowercosts,

andadditionalconsumer

protectionsinplaceto

provideborrowerswith

moreconfidenceintheir

retirementplans.Today’s

reversemortgagecanbe

usedtopaybillsorother

financialburdens,provide

cashflowsimilartoannuities,

oraddadditionalsecurityasa

rainydayaccount–thenew

reversemortgageisnowa

versatile,safeandeffective

retirementplanningtool.

we invite you to find out more.


What is a reverse mortgage?

Areversemortgageisawayforborrowersage

62oroldertounlocktheequityintheirhomeby

turningitintotax-freecashwithouttheborrower

needingtomakemonthlymortgagepayments.

How would a reverse mortgage help your

client with their retirement portfolio?

Areversemortgageprovidesapotentially

inexpensive,easy-to-qualify,tax-free,non-

cancellable,liquidcashreserveforvarioususes.

3 Replace cash reserves

3 Delay Social Security and pension payouts

3 Tax-free loan proceeds may reduce tax liability

3 Postpone drawing down retirement assets, therefore giving assets more time to grow

3 Cover large unexpected expenses, such as medical bills or home modification

3 Eliminate existing mortgage for clients who still have a traditional mortgage balance

3 Finance a new residence through the HECM for Purchase product

Also, a reverse mortgage does not affect traditional governmental retirement benefits, such as Social Security and Medicare.

How can it be used for retirement security?

How much does a reverse mortgage cost?

Manyofthesamecostsassociatedwitharegularmortgageapplytoreversemortgages.Clientswillbe

chargedanoriginationfee,amortgageinsurancepremium(MIP),anappraisalfeeandstandardclosing

costs.Inmostcases,thesefeesandcostsarecappedandmaybefinancedusingtheproceedsofthe

reversemortgage.

What are the qualifications?

3 Theyoungestborrowerontitlemustbe62yearsofageorolder.

3 Thehomemustbetheborrower’sprimaryresidence.

3 Thehomeequitymustexceed40%inmostcases,dependingupontheborrower’sage.

What are some challenges associated with this loan?

Areversemortgageisahomeloan,soadvisorsmayneedtoconfrontdebt-adverseclientsabout

creatingdebtagainstadebt-freeasset.

Advisorsmayalsohavetoworkwithfamilymemberswhodon’twanttheirinheritancediminished.


Six Major Portfolio Survival Risks:

1. Less structured AssistAnce Diminishedrolesofbenefitplansfromboththegovernmentandtheworkplace.

2. MArket VoLAtiLityThemarkethasexperiencedgreatlyvaryingannualreturnsoverthelast30years.

3. infLAtionBasedonhistoricalaverageinflationrates,ifyourclientrequires$50,000tomaintaintheirpresentlifestyle,theywillneedover$131,000in25yearsjusttokeeppace.

4. LongeVityOnememberofa65-year-oldcoupletodayhasa50%chanceoflivingtoage92anda25%chanceoflivingtoage97.

5. tAxesThetopmarginaltaxbracketformanyretireesin2011was35%,sominimizingtaxburdencanhelpstretchsavings.

6. HeALtH cAreApproximately70%ofAmericansage65orolderwillneedsometypeoflong-termcare,andthecostsarerisingfasterthaninflation.

Demographic Statistics:

AMeriprise surVey47%ofrespondentsplantousehomeequitytohelpfundtheirretirement.

Boston coLLege center for retireMent reseArcH74%ofretireeswillfallshortoftheirincomeneedsat62yearsold.

pew reseArcH centerBetween2002and2011,thepercentageofadultsthatsaidtheywillnothaveenoughmoneytolivecomfortablyinretirementrosefrom32%to53%.

Amongadults55to64yearsold,thepercentagewhosaidtheywerenottooconfidentornotatallconfidentthattheywillhaveenoughtoliveoninretirementrosefrom26%in2009to39%in2012.

The Big PictureHomeequityisanothertooltohelpclientsreachtheirgoalsduringretirementplanning.

reverse mortgages aren’t just for people struggling to keep their homes. reverse mortgages can also work for financially comfortable retirees looking for additional retirement security in order to avoid selling other portfolio assets at the wrong time or under duress.

47%

74%


meet hankHankisarecentretireewhoislookingforward

toenjoyingthefruitsofhislabor.Hankworked

closelywithhisadvisortogrowhisnestegg,

buthisportfoliotooka$117,000hitduring

theGreatRecession,whichaccordingto

*Ameriprise,isonparwiththeaverageamount

otherBabyBoomer’slost.

Thankstohisadvisor,he’sbackontrack,but

heunderstandsthatthelosswillimpacthis

qualityoflifeduringretirement.Knowingthis,

Hankwantstohaveanintelligentplaninplace

tomakesurehismoneylastsatleast30years,

especiallyifthemarketturnsvolatileagain.

Appliedstrategically,areversemortgagecan

significantlyincreasetheprobabilitythatHank’s

portfoliowilllast.

Here’s howUsing**MonteCarlosimulations,Hank’scurrent

$600,000portfoliowitha5%withdrawalrate

over30yearsonlyhasa67.5% chance of

survival.

Makingupa$100K+lossisnotaneasyfeat.

Byutilizingareversemortgage,Hankisable

toaffordablyaccesshisequitytoreplacehis

portfoliolosswithouthavingtomeetstringent

qualificationcriteria.

Bycomparison,ifHankweretoleveragehis

homewithareversemortgageandonlyreplace

the$117,000lossfromtheGreatRecession,

hismorerobust$717,000portfoliowitha5%

withdrawalrateover30yearshas an 85%

chance of survival. That’s a 17.5% increase

in the chances of portfolio survivability

when just considering replacing losses.

This is just one of many ways a reverse mortgage can help your client’s portfolio provide a sustainable and secure retirement.

Find ouT more by conTacTing us Today.

*Source: Retirement Derailers survey released by Ameriprise Financial in February 2013. Koski research interviewed 1,000 working Americans ages 50–70 with at least $100,000 in investable assets.

** Monte Carlo simulation method produces a range of estimated portfolio outcomes an investor may experience over a designated period. Monte Carlo is not offered as a tool for forecasting market performance or determining a sustainable withdrawal rate during retirement. It does not reflect historical returns of any portfolio mix or asset class, and should not serve as a guide or substitute for ongoing management of wealth during retirement.

Age 62

stAtusRetired

HoMe VALue$350K (no mortgage)

current portfoLio$600K

desired witHdrAwAL rAte5%

needs portfoLio to LAst 30+ years

distriBution goALMaintain short-term liquidity and mitigate need to access long-term investment portfolio during bear markets

portfoLio surViVABiLity67.5%


Barbaraisarecentretireewho

istryingtodecidetheproper

timetotakeherSocialSecurity

benefits.Basedonhergoals,

herprojectedlivingexpenses

are$60,000peryear.Ifshe

pullsthatmuchfromhercurrent

investmentportfolioyearafter

year,she’lldepleteherfunds

wellshortofhergoaltomakeit

last30years—andshedoesn’t

haveapensiontohelpmakeup

thedifference.Barbarabelieves

thatdrawinguponSocial

Securityisheronlyoption.

Aftermeetingwithheradvisor,

shelearnsthatinordertomake

themostofSocialSecurity

benefits,sheshouldwaituntil

age70inordertocollectthe

highestamount.Byutilizinga

reversemortgagetosupplement

herretirementincomeduring

theeight-yeardeferralperiod,

Barbaracanensurethatshe

receivesmaximumbenefits

withouthavingtodrainher

investmentportfoliotoreachher

goals.

Age 62

stAtusRetired

portfoLio$500K

HoMe VALue$500K (no mortgage)

pension None

meet barbara

scenario 1 and 2 client Portfolio input Parameters:

•Theinitialvalueoftheretiree’saccount

o60/40 securities portfolio

•Equities60%

•FixedIncome40%

Calculationsofinvestmentgain/lossandofretirementincomewithdrawalareperformedeachyearina30-yearperiod.

identical variables in all simulations:

•Initialwithdrawalrate

•Investmentperformance(averageinvestmentreturnbasedondatafrom1973-2009)

•Rateofinflation

•Amountdrawnbytheretiree

differing variables in all simulations:

•Sequenceofinvestmentreturns(randomlyselected)

•Strategiesusedtodeterminewhetherretirementincomeiswithdrawnfromtheaccountand/orthereversemortgagecreditline

Inthecourseofthecalculations,thecashfloweithersurvived30yearsoritdidnot(thetwomostsignificantdeterminantsofcashflowsurvivalaretheinitialwithdrawalrateandwhetherthehigherinvestmentearningyearsoccurearlyorlateinthe30-yearsequence).


ways to use a reverse mortgageTheJournal of Financial Planninghasoutlinedvariousstrategiestoeffectivelyuseareverse

mortgagetohelpretirementfundssurvive:

passiVe strategy

1.Reverse-Mortgage-LastStrategy|Areversemortgageisestablishedwhentheclientisinfinancialtrouble.This

usuallymeansthattheportfoliofundshavebeendepleted,high-valueassetshavebeensoldtomakeendsmeet,

andleveragingthehomeequityisthelastremainingoption.

actiVe strategies

2.Reverse-Mortgage-FirstStrategy|Areversemortgageisestablishedattheoutsetofretirementanddrawn

uponeveryyeartoprovideretirementincomeuntilexhausted,allowingtheclient’sportfoliomoretimetogrow.

Subsequentwithdrawsarethenmadefromtheportfolio.

3.CoordinatedStrategy|Areversemortgageisestablishedattheoutsetofretirementbutonlydrawnupon

iftheportfoliounderperforms.Theneedtousethereversemortgagefundsisdeterminedyearlybasedupon

investmentperformance,whichsparestheportfolioanydrainwhenitisdown,givingitabetterchancetorecover.

Usingtheseactivestrategies,thecashreservesaremadeavailableupfrontandincorporatedintoaplan,giving

theportfoliothemaximumamountoftimetogrowandthebestpossiblechanceofsurvival.Theborrower(s)can

stillliveintheirhomewithoutmakingmonthlymortgagepayments,feelconfidentaboutbeingfinanciallyprepared

foremergencies,andmaintaintheirdesiredqualityoflife.simple and effective.

“Reversemortgagesdohaveaplaceinmainstreamretirementdistributionplanning,andhaveasignificantimpactontheprobabilitythatsomeclientswillbeabletomeettheirpredeterminedretirementgoals.”--The Journal of Financial Planning,“StandbyReverseMortgages:ARiskManagementToolforRetirementDistributions”byJohnSalter,Ph.D.,CFP,AIFA;ShaunPfeiffer;andHaroldEvensky,CFP,AIF

call us today to learn how a reverse mortgage can provide real retirement security for your clients.


FindouthowareversemortgagecanprovideyourclientwithamoresecureretirementTODAY.

call us For more inFormaTion.©2013AmericanAdvisorsGroup


Download - Reverse mortgage plan your future

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