For some retirees, a standby reverse mortgage strategy combined with their saving may increase their chances of meeting their retirement goals. They would draw on a reverse mortgage when the financial markets are correcting and their account values are down and preserve their retirement accounts.

This chart shows a sample scenario for a married couple. They have a house worth $300,000 with an existing mortgage of $100,000.  For retirement assets they have:

Assets in Bank Account $50,000
Assets in Bonds or CDs $50,000
Assets in Stocks $50,000
Expected Rate of Return 4.985%
Expected Rate of Inflation 2.000%
Current Age of Youngest 65
Planning Through Age 95

The colored lines show how much money they could draw from their sources per month and the chances at various draw amounts of their funds being exhausted.

This chart is based the article “Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income” by Barry H. Sacks, J.D., Ph.D.; and Stephen R. Sacks at This paper looks at different strategies for using a reverse mortgage credit line to increase the safe maximum initial rate for taking money out of retirement accounts.

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