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REVERSING CONVENTIONAL WISDOM

12/29/2014

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Retirees are living longer and outliving savings is now a major concern. It is widely accepted that withdrawing more than 4% of retirement savings per year drastically increases the chance that it will run out in less than 30 years. But many retirees find that unexpected expenses make it impossible to avoid doing just that.

The conventional wisdom is to view home equity as a “last resort” to be used only if and when savings are exhausted. But research done by Drs. Barry H. Sacks, J.D., Ph.D. and Stephen R. Sacks, Ph.D shows that reversing that passive strategy by setting up a standby reverse mortgage line of credit is a much more effective way to ensure your savings will last your lifetime. The idea is to draw from the line of credit for expenses exceeding 4% of your savings, which preserves capital during the critical early years of retirement. This approach has been demonstrated to be much safer and more effective under a wide range of conditions and may even leave you a higher net worth to pass on to your heirs. The original Wall Street Journal article can be downloaded here:


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    ABOUT THE Author

    Kevin Michael Melody has been a Mortgage professional in Southern California since 1990. Now based in Huntington Beach, Kevin assists buyers and sellers of residential property with all their financing needs, with a special emphasis on "Old School" personal service. He uses his more than two decades of experience in mortgage lending and residential Real Estate to take his clients from start to finish on any type of transaction. Sellers can take advantage of his intimate knowledge of financing to pre-screen buyers and offer creative solutions for self-employed individuals, business owners and otherwise well-qualified buyers who may not fit traditional lending guidelines. He also assists homeowners looking to refinance to a better rate or lower payment, consolidate debts or get cash for home improvements, and even families whose homes are underwater can be helped under Fannie Mae's Home Affordable Refinance Program (HARP) and Freddie Mac's Open Access Relief Refinance for owner-occupied single-family homes, condos, manufactured homes, and 2-4 unit residential income properties, as well as vacation homes, rentals and investment property. Kevin is a proud veteran of the United States Air Force, and author of the 2001 book "What Lenders Don't Want You To Know."

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