Home owners must be age 62, the home must be their primary residence, and must complete counseling.

It’s a home equity loan that unlocks the equity in the home and turns it into tax-free cash.

There are no mortgage payments.

For financial planning purposes; a growing line of credit can be established as a liquid cash reserve.

The up-front

MIP is now

0.5%

With the exception if

>60% PLF is used in

the first year, then 2.5%

Protection for

qualified non-

borrower’s from

losing the home.

мпрунп

Reverse Mortgage and Cash Flow

1 2 3 4

The general idea is that a HECM Line Of Credit loan can have a beneficial impact on the likelihood of client’s meeting their retirement goals; enabling

these clients an improved probability of weathering market drops during bear markets and stretching their retirement savings.

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Can we borrow from a reverse mortgage line of credit during times

when the portfolio is “off,” in order to increase the probability of

meeting income goals during retirement?

Research Trends Retirement

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The Challenge

Pensions are shifting from defined benefit plans to 401k(s) where balances are modest.

Retirement needs are increasing.

Social security replacement rates are declining.

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Retirement

Boston College Center For Retirement Research

Many future retirees will not be in a position to avoid using home equity in retirement.

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Research

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Trends

Seniors will increasingly turn to reverse mortgages.

More affordable reverse mortgage options are now

available than in the past.

Retirees are likely to seek advice from financial planners.

Journal of Financial Planning

How much can be distributed from a portfolio?

What is the reasonable chance of sustaining this

spending throughout retirement?

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Question

Cash Flow Reserve Strategy (CFR)

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Growth

Two years of retirement living expenses.

Opportunity cost in setting aside large amounts of cash.

Growing cash reserve for retirement living expenses.

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Cash Flow Reverse + Reverse Mortgage

Growing cash reserve! ✔

How much can be distributed from a portfolio?

✔

If the LOC is paid to $0, the loan is paid off.

✔

Borrowers have control. ✔

Tax-Free! ✔

Can be paid back at any time without penalty.

✔

Unused portion of the line of credit grows over time.

✔

Lower Cost ✔

Sustaining this spending throughout retirement?

✔

Six months of income set aside.

✔

Data provided by: Journal of Financial Planning”

Delaying social security!

Tax Planning

Credit line for unexpected expenses.

Last resort source of funds

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Strategies

Medicaid planning for long term care.

Thomas A Mastromatto NMLS#145824

1-855-694-4429 X320

We examined strategies commonly employed by financial planners when using a reverse mortgage.

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Geneva Financial LLC

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