Reverse Mortgages an Important Financial Planning Tool for St. Louis, Missouri Seniors
Once viewed negatively, reverse mortgages may now be a strong financial planning tool
For many years, the public, as well as those in the financial planning community, were somewhat skeptical of reverse mortgages. Several drawbacks led to limited utility and a narrow scope of borrowers for whom reverse mortgages were an advisable option.
High interest rates and closing costs meant that reverse mortgages were expensive, and too many people used them as an instant cash injection without considering the full breadth of their retirement plan, assets, and desired quality of life over a longer period of time.
However, new regulations on the amount that borrowers can take out in the first year have helped to stabilize the market and are leading financial professionals to reconsider the value of reverse mortgages as a source of income with the broader scope of cash flow management during retirement.
As a senior, a reverse mortgage can be an important financial planning tool. St. Louis-based Senior Health Solutions, LLC., agents have more than 20 years of knowledge and expertise in finding the best reverse mortgage for you and your family. If you are contemplating a reverse mortgage, or need financial planning assistance, contact our St. Louis, Missouri office today for compassionate, personal guidance.
Using Missouri reverse mortgages as a line of credit
Conventional wisdom has long-used a formula for what a smart and conservative figure to draw on retirement savings is each year: draw a certain percentage your first year of retirement and adjust for inflation each year moving forward. This method however can lead to a lifestyle many retirees do not prefer, leading to larger withdrawals and potentially running out of money. When used wisely however, a reverse mortgage taken as a line of credit can be a more useful tool for supplementing retirement account income for several reasons:
- Tax savings – Retirement account savings is important while working, as that income is tax free when saved, however when withdrawing from the account, taxes are applied. A reverse mortgage, conversely, is a form of home equity loan and is therefore tax free, though fees may apply when setting up the loan.
- Limiting estate size – Unless you plan to leave your home to a loved one after you pass, collecting on your home equity via a reverse mortgage can greatly limit the tax implications of your estate.
A 2012 study published in the Journal of Financial planning advocated taking a reverse mortgage as a line of credit early in retirement as a component of a plan to help maximize the longevity of retirement accounts. By drawing on your reverse mortgage only in years after your retirement investments performed poorly, you can help your primary accounts better recover. This strategy can be a useful means for a reverse mortgage outside of the traditional scope of benefits.
Contact our St. Louis reverse mortgage team today and learn more about your options for financial freedom
We can help you decide if a reverse mortgage is for you
If a reverse mortgage might fit into your financial planning for retirement, call us today to learn more about how it can supplement your retirement savings. Call (636) 244-4415 or contact us online to make an appointment. At Senior Health Solutions, LLC., we take pride in offering outstanding customer service, personalized to meet each client's needs and goals. Call us today.