What Type Of Retirement Spender Will You Be?
In August 2015, J.P. Morgan Asset Management released a study about retirement spending by Katherine Roy and Sharon Carson. In analyzing the expenditures for their diverse consumer base, they identified four retirement spending profiles and an additional category of miscellaneous individuals.
Retirement Spending Increases And Decreases Over Time
An important simplifying assumption in William Bengen’s research is that retirees spend constant inflation-adjusted amounts throughout retirement. This may be at odds with the spending patterns of many retirees.
Improving Retirement Income Efficiency Using Reverse Mortgages
Maintaining higher fixed costs in retirement increases exposure to sequence risk by requiring a higher withdrawal rate from remaining assets. Drawing from a reverse mortgage has the potential to mitigate this aspect of sequence risk by reducing the need for portfolio withdrawals at inopportune times.
Choosing Costs for a Reverse Mortgage
The discussion of reverse mortgage costs has several moving parts. Which type of cost combination to choose depends on how you plan to use the line of credit during retirement.
How Does the Line Of Credit for a Reverse Mortgage Work?
A mortgage’s effective rate is applied not just to the loan balance, but also to the overall principal limit, which grows throughout the duration of the loan.
A Brief History of Reverse Mortgages in the U.S.
Reverse mortgages have a relatively short history in the United States, beginning in a bank in Maine in 1961.
How Did Reverse Mortgages Get Such a Bad Reputation?
Before discussing how reverse mortgages can fit into your retirement income plan, it is worthwhile to first consider in greater detail the bad reputation reverse mortgages have developed.
Wise Reverse Mortgages Can Be a Saving Grace for Retirees
If, after considering other housing options, you have decided to remain in an eligible home or to move into a new home, you may want to consider a Home Equity Conversion Mortgage (HECM) – more commonly known as a reverse mortgage – as a source of retirement income.
Should You Downsize in Retirement?
One method for freeing home equity for other uses is to downsize your home as a part of moving. Downsizing could mean either moving to a smaller home, or moving into a similar-sized home in a less expensive community.
How to Age in Place
Originally published at Forbes Another important consideration for housing decisions, whether you decide to stay put or move, is to make sure a foundation exists to comfortably support aging in place. This concept refers to the growing industry around helping the aging population remain in their homes despite functional or cognitive impairments. Individuals benefit from […]
