Study Shows Increased Portfolio Success with Reverse Mortgage
A new Study from IBIS shows benefits of reverse mortgage on investment portfolio. A recent article in the Journal of Financial Planning written by Ibis Software’s Jerry Wagner illustrates the benefits of a reverse mortgage for clients with a retirement portfolio. This study reiterates other studies that show the increased success of investors being able to take out larger sustainable withdrawals from their portfolios each year when using a reverse mortgage strategically. The study centers on what Wagner refers to as the Six Percent Rule in contrast to the traditionally accepted 4% rule.What is the 4% rule? in 1994 Bierwirth and Bengen developed what is known as the 4% rule in the financial planning community. It states that a person planning for 30 year retirement with their portfolio invested 50% in equities or stocks should withdrawal 4% of their initial value in the first year and subsequently increase it each year to adjust for increased cost of living. This strategy purported a 90% success rate.