Leading Retirement Researcher Pens New Book on Reverse Mortgages

A new book on reverse mortgages hit the shelves this past weekend, offering readers a comprehensive guide on the valuable role home equity plays in retirement income planning.

“Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement” (Retirement Researcher Media, 2016) by Wade Pfau, Ph.D., CFA, principal and director of retirement research at McLean Asset Management in McLean, Va., is the latest manuscript detailing the efficacy of reverse mortgages as a retirement income strategy.

The book, released September 18, provides a framework for retirement income planning, including a discussion on the different challenges and philosophies for creating a financial plan that works best for an individual’s particular circumstances. This helps set the stage for an in-depth analysis of reverse mortgages.


“Reverse mortgages are still a niche topic in retirement income planning, but I think it’s going to grow and more attention will be paid to it,” Pfau told RMD. “In the financial planning community there is still an opportunity to be an early mover into this area as more consumers and financial planners take a closer look at this topic.”

Pfau, who also serves as a professor of retirement income in the Ph.D. program for Financial Planning and Retirement Planning at The American College of Financial Services in Bryn Mawr, Pa., has extensively researched and written articles about the various, strategic uses of reverse mortgages within the context of financial planning.

Like much of Pfau’s writing, which frequently appears in Forbes and The Wall Street Journal, the target audience for “Reverse Mortgages” is a combination of both financial advisors and “sophisticated” consumers—those who have a basic financial literacy and read a lot about financial- and investment-planning related topics.

“Reverse Mortgages” provides a historical background of reverse mortgage in the U.S. before moving into more complex subject matter on how these products work, including a section on their potential uses and how these loans fit into portfolio coordination for retirement spending.

The book also features new research from Pfau on the reverse mortgage tenure payment as an annuity alternative, and also compares some of the most critical research that has been published on reverse mortgages in retirement income planning over the years.

“There hasn’t been a lot of quantification about which strategy works best in which circumstances,” Pfau said. “This is the first book that compares the Sacks’ strategy against the Texas Tech Strategy, as well as against other strategies.”

Pfau’s book is the most recent published work that explores reverse mortgages and their financial planning capabilities. Other notable works include “What’s the Deal with Reverse Mortgages?” written by industry veteran and Chair of the Funding Longevity Task Force Shelley Giordano; and “Understanding Reverse 2016” from Dan Hultquist, a Certified Reverse Mortgage Professional and now director of learning and development at ReverseVision.

Whereas Giordano and Hultquist have written their works as direct participants in the reverse mortgage industry, Pfau’s “Reverse Mortgages” comes from the periphery with a financial planning perspective.

“This is one of the few books out there not written by someone in the [reverse mortgage] industry,” Pfau said. “It’s coming from a different perspective—a broader perspective of how reverse mortgage work, but here’s how you can think of them as part of a retirement income plan.”

The book, “Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,” is currently available for purchase on Amazon.

Written by Jason Oliva

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  • Jason claims the book offers “readers a comprehensive guide on the valuable role home equity plays in retirement income planning.” Then he writes: “’Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement’ (Retirement Researcher Media, 2016) is the latest manuscript detailing the efficacy of reverse mortgages as a retirement income strategy.”

    You cannot have it both ways. It is either a comprehensive guide on the role of home equity or it is a comprehensive guide on reverse mortgages. By its title it is the latter.

    This is fact: “Like much of Pfau’s writing, which frequently appears in Forbes and The Wall Street Journal, the target audience for “Reverse Mortgages” is a combination of both financial advisors and “sophisticated” consumers…;” however, it is also true that while some articles have had hundreds of thousands of readers, the total readers of Pfau’s articles has not reached 100,000 readers and most likely most of those are individuals who are being counted far more than once since they follow what Pfau writes.

    Reverse mortgages are nothing like annuities. So far the only reverse mortgage that has anything like an annuity payout is the HECM, period. With the HECM, the amount paid out can change monthly by election of the borrower. Is that true of annuities. When the home is no longer occupied by any borrower as that borrower’s principal residence, the payout terminates. Annuity payments have nothing to do with where the beneficiary resides. HECM payouts are suspended when a bankruptcy petition is filed and is not available to the borrower until the bankruptcy process is settled in full. Annuities are not automatically suspended when a bankruptcy petition is filed. Annuity payouts do not increase a balance due on debt but HECM payouts do. Annuity costs do not grow throughout the annuity period but HECM costs do.

    Annuities are assets; HECMs are debts. They both produce cash inflow but one results in income to the payout recipient while the payout on an annuity is cash inflow but not income. One pays nothing upfront with a HECM but with annuities must be paid for either immediately or overtime in order for their payouts to begin. HECMs are paid for at termination. All payments for annuities are mandatory; HECM payments before termination are voluntary.

    So other than cash inflow, how are reverse mortgages and annuities equivalent?

    • First of all there is no risk other than you don’t pay taxes or keep house up or don’t keep insurance. Not sure its not like annuity either but it does have some features that give them a close resemblance.

      • Bill,

        Say your senior has an eligible non-borrowing spouse and the borrowing spouse has to go to a nursing facility for several years. What happens to the home?

        How about the senior who buys the larger home using a H4P but would not have done it otherwise. Within a few years, the senior is no longer able to do the increased work associated with the larger home and cannot afford house cleaners. If the home value has dropped and the balance due on the home is high enough that the home equity left over will not result in insufficient cash to buy a new home.

        I have seen HECMs cause seniors to lose their homes. For example, the senior could not pay property taxes timely and normally under state law would have five years to bail the senior out but with a HECM, the property went into default when the property tax was not paid on time. The senior merely had to wait four years and his mother’s short-term post-mortem trust would terminate and he had a large bequest coming in sufficient time to pay all back taxes before the five year period was gone. So he lost his home through foreclosure for failure to pay taxes. The balance due was under water, so he lost the home.

  • Jason,

    I am glad you brought the new release to the forefront, I will hold comment until I read the book, which I intend to purchase.

    I also appreciated you giving us Amazon as the place we can purchase “How to Use Reverse Mortgages to Secure Your Retirement”!

    I am looking forward to the read and compare it to reality in our world. I am sure Wade Pfau did a fine job with the book, I will keep all of you posted.

    Thanks Jason,

    John A. Smaldone

    • John,

      It is great to support people like Dr. Pfau but we also need to be careful about doing it before we even know what he wrote. From the little I have read, there is some trouble with it but that is what you expect from those who have been involved with the industry for less than a few years.

      • Cynic,

        This is why in my comment I put that I would hold comment on the Book until I read it, which I am in the process of purchasing it now.

        I fully agree with you, that is why I said what I did right up front. You can be sure I will read the Book first before I comment on the accuracy of it!

        I do thank you for your reply, you make this Thursday a good one for yourself!


      • John,

        On one hand you say: “I will hold comment until I read the book…..” But then you go on to give us an opinion about the book when you say: “I am sure Wade Pfau did a fine job with the book….” So in the same comment you tell us that you withholding comment but then go on to tell us of your surety about the job that was done on it again when you have not read it.

        I know I have never read one book by Dr. Pfau. Have you?

        While I have no basis to fault your statement of surety, I have no basis to accept it either since you do not provide us with any statement about reading any of his other works of approximately the same length on financial matters.

        I look forward to your opinion once your have read the book. I hope to read it next month.

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