My Comments: I recently received an email from Don Graves, the author of the following words since I’m on his list of contacts. I got that way several years ago when I spent six months studying for and passing an extensive license process to be qualified to offer reverse mortgages to anyone interested.

Then along came Covid and higher interest rates and my semi-retired status caused me to abandon the effort. Be assured, however, it was not because I changed my mind about the validity of a reverse mortgage as a financial device to improve the financial well-being of anyone stressed about the financial implications of their current or future retirement.

My wife and I signed up for one several years ago and it has made a significant difference in our financial lives. We have absolutely no regrets.

Here’s how Don Graves began his recent message to me:

Good morning Tony. You may have heard it said that “An ounce of prevention is worth a pound of cure”. This timeless adage holds particularly true when it comes to navigating the complexities of retirement.

As we guide clients through this significant life transition, it’s crucial to acknowledge and tackle the diverse challenges they may encounter. Today, let’s explore seven common disruptions that retirees often face, along with effective strategies to manage them.

Using All Available Assets (AAA)

Before we address these seven disruptions, it’s also crucial to recognize the array of retirement assets available to individuals. One often ignored asset is housing wealth, with nearly 87% of retirees owning a home, representing about two-thirds of the average baby boomer’s wealth.

Despite its significance, many advisors are unaware of how to effectively leverage this asset. While clients typically allocate resources into(1) income, (2) investment and (3) insurance buckets, housing wealth remains largely untapped. Start thinking of it as bucket #4.

Imagine transforming this dormant asset into a dynamic reserve, seamlessly integrated with the first 3 buckets to confront retirement challenges head-on.

By recognizing and harnessing this potential housing wealth, we can enhance financial security and discover new avenues for retirement planning success.

Use Bucket #4 and Help Manage These 7 Retirement Disruptions

Loss of a Loved One: The emotional toll of losing a family member or close friend can be profound, especially for surviving spouses. Alongside offering emotional support, incorporating a finance tool like a reverse mortgage line of credit can provide liquidity to manage expenses.

Personal Health Setbacks: Health issues can significantly impact both the quality of life and financial stability in retirement. Leveraging your home equity asset can help cover unexpected medical expenses and help maintain financial well-being.

Partner’s Health Challenges: When a spouse or significant other faces health issues, it can lead to increased healthcare costs and caregiving responsibilities. Integrating financial resources into someone’s plan can offer much flexibility and alleviate financial strain.

Financial Setbacks: Unforeseen financial challenges like market downturns or unexpected expenses can disrupt retirement plans. Utilizing a diversified financial strategy can provide a safety net during turbulent times.

Early Retirement: Sometimes retirement occurs earlier than planned due to various reasons. Incorporating available financial resources into the retirement plan can help bridge the income gap and maintain financial stability during an early retirement.

Long Term Care Needs: The need for long-term care can arise suddenly, creating a significant financial burden. Accessing funds from various sources helps cover these care expenses without liquidating other assets prematurely.

Cognitive Decline: Cognitive health issues may necessitate additional support and expenses. Planning ahead and utilizing financial resources can ensure access to funds for necessary care and services.

Leveraging a reverse mortgage alongside other assets can provide a comprehensive approach to managing all seven potential disruptions in retirement.

By utilizing four financial buckets, including a reverse mortgage, individuals can enhance their financial freedom and increase the likelihood of retirement success. This strategy allows flexibility when addressing unexpected financial challenges while maintaining financial stability and security throughout retirement.

Life Happens Fast

Recently we had the privilege of assisting a couple who encountered unexpected health challenges in retirement. The wife was just 64, a fitness instructor with a thriving practice was diagnosed with a terminal brain disease resulting in significant medical expenses and a reduction in their income.

Thankfully, their financial advisor encouraged them to look into using a reverse mortgage to eliminate their monthly mortgage payment, increasing their cash flow as well as establishing what’s known as an HECM line of credit.

This financial resource allowed them to cover some medical bills, maintain their standard of living, and an ability to live their lives without the added stress of financial worries.

In navigating these disruptions, it’s imperative to approach retirement planning comprehensively.

By incorporating tools like a reverse mortgage line of credit alongside traditional investments, we can offer clients greater financial resilience and peace of mind.

Please Note: Since I’m no longer a licensed financial professional for reverse mortgages, I invite you to send an email to Don Graves using this address: AskDonGraves@gmail.com or reach him through HousingWealth.net. Find the About Us tab and Don Graves’ name is on the right. Reach out to me if you need any help.    Tony Kendzior, CLU, ChFC