Using a HECM to increase IRA withdrawal flexibility and reduce retirement cash flow risk.
The Problem
Retirees need supplemental income after they stop working full time. This income typically comes from a variety of different saving vehicles, including social security, qualified and non-qualified retirement accounts, pension plans and other savings. Many retirees experience a shortfall of resources to meet their planned expenses over time, while others have ample resources but wouldn’t mind additional income without additional risk. If the retiree has a portion of their retirement in an IRA (Individual Retirement Account), it is possible that the IRA can be ‘stretched’ to provide additional income using another asset most retirees don’t consider as part of their retirement planned income.
The Solution
A coordinated approach to traditional asset distribution called The IRA Stretch™. The IRA Stretch™ uses a HECM (Home Equity Conversion Mortgage) coordinated with draws from traditional retirement accounts that could allow clients $25,000 or more beyond what their sustainable income plan allowed in the initial design. If a client has spent their non-qualified assets and are drawing additional funds from their IRA’s, this approach allows them to reduce the likelihood of outliving their savings.
How does it Work?
Secure a HECM (Home Equity Conversion Mortgage), more commonly known as a reverse mortgage, to create an accessible pool of funds that can be drawn from tax free during retirement. This provides increased flexibility for clients to choose the timing and amounts in which they draw on their retirement savings, allowing the client to stretch the value of their IRA accounts.
The Journey
If you find this interesting as a Strategy, we will provide a custom review of Your Situation, followed by a Custom Plan. If this meets with your expectations, goals and risk tolerance we’ll Engage and work with you and your advisors to complete the transaction.
