Reverse Mortgage

A reverse mortgage allows a senior citizen to receive funds that are based on the equity value of their home. In other words, a reverse mortgage allows a person to borrow against their home equity. In the United States, a person must be at least 62 years of age to initiate a reverse mortgage, and there are minimum requirements for the level home equity. The funds are provided by a lending institution and can be in the form of periodic income payments or a lump sum. In 2009, Congress increased the maximum home value that can be borrowed against to $625,000 from $417,000. Almost all reverse mortgages are backed or insured by the Federal Housing Administration (FHA). A primary residence is a meaningful portion of the net worth of many senior citizens. As a result, a reverse mortgage can play a very important role in financial planning because it allows seniors to derive income from a significant but largely illiquid asset.

Financial Crisis Will be Seen Fundamentally as a Crisis for Retirees and Near Retirees

Professor James Galbraith provided a keynote address at a recent industry conference sponsored by NAVA—the Association for Insured Retirement Solutions. 

Professor Galbraith comes from the Economics department at the LBJ School of Public Affairs at the University of Texas at Austin.  A Keynesian and an author most recently of The Predator State, Professor Galbraith has been a consistently strong and vocal advocate of government stimulus and intervention in response to the financial crisis.

Professor Galbraith’s basic message is...

Longevity Risk Listed as Top Retirement Risk - "Biggest and Most Difficult to Figure Out"

A list of ten risks faced by retirees includes the obvious such as stock market risk , but also includes issues that may not be top-of-mind for many retirees such as inflation risk and interest rate risk . Longevity risk is at the top of the list. Immediate annuities and the longevity annuity are mentioned as a potential solutions to the risk of outliving one's assets: "Given that, what's the best way to manage that risk? Social Security , traditional pensions and payout annuities all promise...