Through the years, reverse mortgages have proven their ability to help seniors who are facing situations of financial struggle. The equity in the home can be converted to pay off existing mortgages, credit card bills, debts, and medical expenses. But reverse mortgage solutions are not only for those in dire need. In fact, reverse mortgages may be even more beneficial for those seniors who use the product as a solution in financial planning during retirement.
In retirement, seniors with solid investments on stocks and bonds may encounter a period when the market is volatile and investments are down. The problem is, drawing upon them at this time erases a chance that they may recover.
Avoiding withdrawal on a stock portfolio increases its potential to grow. Therefore, in some cases, using the funds of a reverse mortgage’s line of credit instead of drawing down on these investments can help you avoid liquidating a portfolio.
Explored by economic researchers in recent high-quality academic articles, the reverse mortgage line of credit option continues to present itself as a solid investment strategy. According to Real Estate Tax Attorney Barry Sacks, Ph.D., it even proves itself a better strategy than the conventional passive method of treating the reverse mortgage as a last resort to be tapped into only after other resources are tapped into first.
In addition, studies have shown that the reverse mortgage line of credit can increase a portfolio’s survivability over time as well. When comparing the outcomes of treating the reverse mortgage as a last resort option versus treating it as a “first resort” strategy to draw upon before other investments, results show that a retiree’s net worth ended up greater in a 30-year period.
When used early on in retirement, a reverse mortgage line of credit may serve as a sort of strategy similar to insurance. Using this method, the line of credit may become a supplementary income tapped when needed, and paid back once the portfolio recovers. Thus, when the problem of a volatile market occurs during retirement, the reverse mortgage becomes a powerful solution.
Call American Advisors Group at (888) 998-3147, and talk to your Reverse Mortgage Professional to learn more about how you can take advantage of this active investment strategy and intelligent risk management tool. You might discover that a reverse mortgage may be just the solution you have been looking for.
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