Liberty Launches New Financial Planning Research for Reverse Mortgages

Liberty Home Equity Solutions, Inc. announced on Monday that it is sponsoring a new research study from Texas Tech University and researchers John Salter, Shaun Pfeiffer, and Harold Evensky on how utilizing home equity through a reverse mortgage can help preserve retirement portfolios.

The Texas Tech researchers have previously released a related study about how obtaining a line of credit through the federally-insured Home Equity Conversion Mortgage (HECM) program may maintain a retirement portfolio’s longevity. 

This time, the research study will focus on the SafeMax withdrawal rate when using a “Standby Reverse Mortgage Portfolio Protection Strategy.” 


The SafeMax withdrawal rate, or “4% rule,” was conceived by Bill Bengen in 1994 and relates to how much someone can withdraw each year from their investment portfolio while ensuring their savings last 30 years. Bengen’s research assumed a constant asset allocation model and was based off historical investment results. 

His work regarding the SafeMax Withdrawal rate gained widespread adoption among financial advisors when counseling clients on how to make sure their investments last. However, Bengen’s research never factored in how the use of a client’s home equity could affect how much they can withdraw from their investment portfolio, and no research has been conducted to calculate the SafeMax rule using projected investment returns—until now.

The research project sponsored by Liberty will focus on how a HECM Saver loan may affect how much a client can withdraw from their savings within a given period of time. The research will build off of Evensky and Salter’s previous study, the Standby Reverse Mortgage Portfolio Protection Strategy. 

This research evaluated the use of a HECM Saver loan where a line-of-credit disbursement option is used as a “standby” to meet client cash requirements rather than drawing down investments when portfolios were at 80% or less of their projected target. The “standby strategy” was found to improve the probability by nearly 30% that a client’s savings would last 30 years.

“When I learned of the HECM Saver’s lower upfront fees and the growth feature that the line-of-credit offers, I was interested how this product might assist me with managing the cash and distribution requirements for my clients given the reality of market volatility,” said Harold Evensky, co-founder and president of Evensky & Katz Wealth Management, in a statement. 

As it turns out, Evensky continues, the use of the HECM Saver as a “standby” can serve as portfolio longevity protection.

“I am equally excited to see how the HECM Saver may help clients potentially increase how much they may safely withdraw from their savings yet have confidence their savings will be there as long as they need them,” he said. 

The results of this research is useful for reverse mortgage lenders, as well.

“This research and the relationship with one of the country’s leading financial advisors is foundational to our effort to introduce the lower-cost HECM loan options available to clients, and how they may contribute to better retirement outcomes for senior homeowners,” said Pete Engelken, President of Liberty Home Equity Solutions, Inc., in a statement. 

Evensky and Salter, an associate professor at Texas Tech and wealth manager for Evensky & Katz, will present their Standby Reverse Mortgage Strategy and a preview of their new research during a live webinar in June. 

Written by Alyssa Gerace

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  • As an industry we have much to thank Mr. Evensky and Dr. Salter for. We have heard for years now that the underlying concepts were correct and complaints about why didn’t anyone else see things the way we do. The fact is no substantial research had been done verifying the claims nor had any practical rules been promoted based on such research.

    Let us hope that lenders will encourage growth in this area and will absorb some of the initial costs of marketing the “concepts.” In grad school it is amazing how many financial planners are willing to entertain these concepts but how few of the instructors will employ them in their own practices. Yet this is exactly how old ideas are overthrown. The instructors are NOT stupid; they are very practical and do not want to approach their clients with new ideas until there is a wider acceptance of them.

    This is a journey. To encourage people to follow us, the first thing that is needed is evidence. In the area of evidence, Mr. Evensky, Dr. Salter, and Dr. Pfeiffer are leading the way. It would have been a shame to see them stop earlier this year.

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