Journal of Financial Planning Highlights Importance of Reverse Mortgages

Journal of Financial Planning Highlights Importance of Reverse Mortgages

Reverse mortgages can provide an essential risk mitigation tool for millions of retirees—dramatically reducing exposure to longevity and market risks while also growing their investment portfolios, according to an article published in the December issue of the Journal of Financial Planning

The article, titled To Reduce the Risk of Retirement Portfolio Exhaustion: Include Home Equity as a Non-Correlated Asset in the Portfolio, found that retirement strategies that use a reverse mortgage as an alternative source of cash flow to a traditional investment portfolio hold the most significant benefit for mass affluent Americans—generally defined as those with $100,000 to $1.5 million in investible assets.

The article yields critical insights for financial planners and the wealth advising industry in light of the massive portfolio gains made possible by including home equity in a retirement plan. It also points to a substantial demographic shift for the reverse mortgage industry as a whole. It strengthens its positioning as a broader wealth management solution for Americans entering retirement with higher net worth.

“When it comes to reducing investment risks, this study is perhaps one of the most significant findings since the prevailing Modern Portfolio Theory (MPT) was introduced in 1952,” says Phil Walker, Vice President of Strategic Partnerships and Retirement Strategies at Finance of America Reverse, who co-authored the study with retirement researchers Drs. Barry and Stephen Sacks.

Published by

Darryl Hicks

Darryl Hicks is Vice President of Communications for the National Reverse Mortgage Lenders Association. In this capacity, Hicks writes for NRMLA's publications, manages the association's web sites and social media accounts, assists committees and the Board of Directors, and manages the Certified Reverse Mortgage Professional designation. Prior to joining NRMLA in 1999, Hicks spent three years in the Washington, D.C. bureau for National Mortgage News.