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The Most Critical Reverse Mortgage Research: 2017 Edition

Tracking down vital research on reverse mortgages can be challenging. So rather than spending a good chunk of valuable time sifting through countless Google search results, RMD has made the hunt easier by compiling the most critical reverse mortgage research in recent years.

For reverse mortgage professionals who are looking to communicate with financial planners in a meaningful way, consider reading these key research items to aid you in conversations with advisers, their clients and other financial service professionals.

Only a truly informed mind can effectively communicate the value of using a reverse mortgage to supplement a retirement income strategy. Brush up on the latest and most popular literature on reverse mortgage retirement research below:

Researchers Reveal Biggest Roadblocks to Reverse Mortgage Borrowing — The research published in this RMD story stems from a panel discussion on the latest reverse mortgage studies conducted by Christopher Mayer, CEO of Longbridge Financial and Paul Milstein Professor of Real Estate and Economics at Columbia Business School; and Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute. The respective research from these authors sheds light on the overarching factors that are ultimately challenging the finances of senior households, which as a result, may be preventing them from tapping into their home equity via reverse mortgages.

How Home Equity Extraction and Reverse Mortgages Affect the Financial Well-Being of Senior Households” — Stephanie Moulton, John Glenn College of Public Affairs, The Ohio State University; Donald Haurin, Department of Economics, The Ohio State University; Samuel Dodini and Maximillian Schmeiser, Federal Reserve Board. The study results, also published on RMD, show the impact of tapping into home equity through various extraction methods, including reverse mortgages, home equity loans, home equity lines of credit and cash-out refinancing. When comparing these different extraction methods, researchers found that reverse mortgages can have a positive impact on the financial well-being of borrowers.

An Alternative Asset to Buffer Sequence-of-Return Risk in Retirement” — Barry H. Sacks, Mary Jo Lafaye. This case study, discussed in detail on the blog Tools for Retirement Planning, demonstrates the coordinated strategy previously introduced by Barry and Stephen Sacks in 2012. The case study allows you to “see” how effective a reverse mortgage line of credit can be in financial planning, assuming a $500,000 portfolio consisting of 50/50 equity/bond allocation beginning in 1973. (Retirement Management Journal, 2016).

Reverse Mortgages, Annuities, and Investments: Sorting Out the Options to Generate Sustainable Retirement Income” — Joseph Tomlinson, FSA, CFP; Shaun Pfeiffer, Ph.D., CFP; and John Salter, Ph.D., CFP, AIFA. This report examines how using either reverse mortgage option (line of credit vs. tenure) can generate improvements in sustainable retirement income, particularly when combined with single-premium immediate annuities (Journal of Personal Finance, 2016)

Retire on the House: The Use of Reverse Mortgages to Enhance Retirement Security” — Mark J. Warshansky and Tatevik Zohrabyan. This 92-page study, provided by researchers from the Massachusetts Institute of Technology Center on Finance and Policy, offers a literature review of recent reverse mortgage research and analyzes what share of retired households with sufficient home equity and significant financial assets can best use a reverse mortgage (MIT Center on Finance and Policy, 2016)

Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income” — Barry H. Sacks, J.D., Ph.D.; and Stephen R. Sacks, Ph.D. This paper examines three strategies for using home equity in the form of a reverse mortgage credit line to increase the safe maximum initial rate of retirement income withdrawals. (Journal of Financial Planning, 2010).

Increasing the Sustainable Withdrawal Rate Using the Standby Reverse Mortgage” — Shaun Pfeiffer, Ph.D; John Salter, Ph.D, CFP, AIFA; and Harold Evensky, CFP, AIF. This study investigates maximum real sustainable withdrawal rates for retirement plans that incorporate the use of standby reverse mortgages. (Journal of Financial Planning, 2012).

The 6.0 Percent Rule” — Gerald C. Wagner, Ph.D. This paper provides financial planners with a review of the relative merits of using a reverse mortgage as a retirement spending supplement. (Journal of Financial Planning, 2013).

HECM Reverse Mortgages: Now or Last Resort?”— Shaun Pfeiffer, Ph.D; Angus Schaal, CFP; and John Salter, Ph.D., CFP, AIFA. This study outlines recent changes to the reverse mortgage market and investigates plan survival rates for distribution strategies that establish a HECM line of credit at the beginning of retirement and as a last resort. (Journal of Financial Planning, 2014).

The Reverse Mortgage: A Strategic Lifetime Income Planning Resource” — Tom Davison, MA, Ph.D., CFP; and Keith Turner, Certified Reverse Mortgage Professional (CRMP) with Retirement Funding Solutions. This article explains how reverse mortgages work, using research showing that strategically combining reverse mortgages and investment portfolios can significantly boost sustainable retirement income. (Journal of Retirement, 2015).

Incorporating Home Equity into a Retirement Income Strategy” — Wade D. Pfau, Ph.D., CFA. This paper explores six different methods for incorporating home equity into a retirement income plan through the use of a reverse mortgage. The paper also includes references and citations to past research on reverse mortgages. (Social Science Research Network, 2015).

Written by Jason Oliva