How to Potentially Protect Your Client’s Portfolio with a Reverse Mortgage

“Using reverse mortgages as portfolio buffers and emergency reserve funds will help protect against the premature eroding of portfolio assets because of poor timing.”1

There are many ways a reverse mortgage can be used as a practical way to benefit your clients’ portfolios. If used strategically, they can even see potential growth in their available funds through a reverse mortgage line of credit.

Tapping into home equity can help eligible clients leave his or her investment portfolio untouched for longer, can allow for a delay claiming Social Security, and can enable homeowners to free up some cash to enhance investment portfolios. Here’s how.

Build more wealth:

By using a reverse mortgage as a financial planning tool, your client may be able to leave his or her investment portfolio untouched, allowing it to gain in value or avoid selling investments at a loss.

Particularly during economic downturns and when stock market investments have taken a hit, this strategy should be considered. For many retirees, the post-recession era was a difficult time to withdraw from retirement accounts that had lost value. Tapping into home equity during times like these and allowing investments to rebound can prove effective in some cases. In fact, research has indicated the reverse mortgage line of credit is a tool that can help mitigate sequence of returns’ risk for retirees who have invested retirement assets.1

Flexibility of funds:

Whether a client delays selling retirement investments or uses the reverse mortgage funds for some other purpose, ultimately tapping into home equity can offer successful financial options for retirement.

A reverse mortgage can be used to pay for health care and living expenses, or it can be used as a potential safety net for clients who may still want to take liberties with their other investments. Home equity is not a silver bullet, but renowned researchers have shown that some retired homeowners may be better off when they use a reverse mortgage as part of their retirement strategy.


The reverse mortgage borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance.  The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

If you are interested in learning more about reverse mortgages and how to talk to your clients about accessing home equity, contact an expert at Finance of America Reverse.

*Not tax advice. Consult a tax professional.

1 Jeffrey Levine, CEO, BluePrint Wealth Alliance, “Protecting Clients’ Portfolio Assets with a Reverse Mortgage,” ThinkAdvisor, January 4, 2017.

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