USA Today: Using a Reverse Mortgage to Protect Other Investments

The reverse mortgage line of credit continues to gain acknowledgment from the mainstream press for its ability to help retirees protect their other investments such as IRAs.

In a recent column, USA Today personal finance and retirement contributor Robert Powell fielded a question from one reader who said she and her husband are considering converting their traditional IRA to a Roth IRA. The reader, Brigitte Kelley, 67, of Milledgeville, Ga., also expressed her husband’s willingness to do a reverse mortgage. 

After addressing the IRA conversion inquiry, advising Mrs. Kelley to consider her future tax rate, among other important considerations, Powell then tackles the reverse mortgage question.

“As for the reverse mortgage, some experts suggest applying for a reverse mortgage with a line of credit as soon as possible,” Powell writes. “Why might you do this? Having a reverse mortgage with line of credit in place gives you the option of taking money out of your house instead of your IRAs when markets are down.”

Powell then cites a study published this year from Wade Pfau of The American College of Financial Services, which describes in detail six strategies for incorporating home equity into a retirement income plan through the use of a reverse mortgage.

While retirees should consult with a financial adviser to determine which strategy might work best for their retirement plan, it may be worth considering getting a reverse mortgage earlier in retirement as opposed to later. 

“But what Pfau’s study did conclude without equivocation was this: ‘A key theme is that there is great value for (people) to open a reverse mortgage line of credit at the earliest possible age,'” Powell writes. 

Read the USA Today article.

Written by Jason Oliva

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