The top conversations on APViewpoint last week were started by Wade Pfau and Richard Michaud. They generated thoughtful discussion with wide ranging opinions on how to use reverse mortgages to secure your retirement and how policymakers are affecting the U.S. economic environment.
Wade Pfau’s How to Use Reverse Mortgages to Secure Your Retirement generated 16 comments from advisors commending Pfau’s comparison of income-annuity strategies to tenured-payment options for a reverse mortgage. Members agreed that a home equity conversion mortgage (HECM) can be a good option given the current low-rate environment, and supported Wade’s argument that “[opening] a reverse mortgage as a last resort option is the worst possible way to use home equity to support retirement spending.” However, they agreed this only holds true if the borrower “opens the reverse mortgage as early as possible to allow for line of credit growth, but only spends from it after all else is lost.” Advisors also discussed the possible risks that could arise when taking out an HECM, and pointed to real-life scenarios that could arise, such as a divorce that leaves the borrowers unable to afford to live in the home, which would result in unfavorable outcomes.
Richard Michaud’s A Fitful Calm provoked nine comments from advisors discussing the U.S. economic environment. While some advisors argued that monetary policies in the last decade have been ineffective because “low interest rates have inflated asset prices and lowered expected future returns,” others argued that the policies need to be assessed while considering what would have happened if the Fed had not engaged in QE programs following the financial crisis. Advisors agreed that policymakers had to respond to the instability of the crisis by applying substantial monetary stimulus, but raised concerns about the effectiveness of easy money given that it has been sustained over an extended period of time. Members discussed the economic issues policymakers are now facing and suggested that infrastructure spending could stimulate growth and lower the deficit, but they warned that it is a solution that is politically difficult to implement. Advisors concluded that a “substantial innovation-based productivity surge” would be the most effective way to combat the prevailing economic issues.
APViewpoint will be hosting its next CE eligible webinar, Broadening the Opportunity Set in Emerging Markets, Tuesday, October 18, at 4:15 pm ET. In this presentation, Calamos Co-Chief Investment Officer Nick Niziolek will explain how advisors can capture the growth potential of emerging market equities while managing volatility. You can register for the upcoming webinar here.
Marianne Brunet is a financial markets analyst with Advisor Perspectives.
Read more articles by Marianne Brunet
