Feldman: What’s one of the newest things you feel that advisors should be thinking about today?

Jordan: I’ve recently become an advocate for reverse mortgages. I used to hold up a garlic and the crucifix whenever I heard about reverse mortgages. But for people over age 62, there’s $10.2 trillion tied up in their houses. And reverse mortgages are not just for the wealthy people.

You’ve got some poor guy who bought a house for $25,000 some 30 years ago. It could be worth $250,000 now. For the first time in his life, he has access to funds.

And so there could be the possibility of using a buffer asset. If you’re in a situation like recently, when the Dow went down 1,000 points in a day, that’s volatile. Well, guess what? You shouldn’t be taking money out of your account. Perhaps you could shift to another pocket. And it could come from your reverse mortgage. And the money comes out on a tax-free basis. And so it allows the portfolio to heal, the classic buffer-asset type of approach. That’s one thing to do.

Another benefit a reverse mortgage could provide for someone who reaches age 62 is to provide a Social Security bridge. This would allow you to obtain the funds you might need and then wait until age 67 or 70, when the monthly payout would be significantly more. If you wait till 70, it’s 77% more.

With IRMAA [income-related monthly adjustment amount], how much money you make in retirement dictates the premiums you pay for Medicare. Well, if you use some of your income from your reverse mortgage, it’s tax-free, and so using it could help lower Medicare premiums.

So there’s a lot of flexibility there.

People have to begin to use the wealth they have in their home. For the most part, it’s three-quarters of a person’s net assets in terms of the average person. And they’re able to use that wealth instead of just saying, “The house is paid off.” This could be helpful, especially because people are living a lot longer.


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