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Nobel Laureate: “The Promise of Reverse Mortgages”


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Nobel Laureate Economist Robert C. Merton Challenges Target Date Funds and Asserts “The Promise of Reverse Mortgages”

Robert C Merton
Robert C Merton

Nobel Laureates are a rare breed. It’s a very exclusive collection of experts, humanitarians and scientists. Robert Merton is an American economist and professor of economics at M.I.T. who won the Nobel Prize in 1997. Surprisingly he espouses the promise of reverse mortgages in his November commentary in Advisor Perspectives.

First Merton begins by exposing the perils of Target Date Funds, a typical investment strategy utilized in retirement planning. What is a Target Date Fund? It is an investment strategy that adjusts one’s retirement portfolio mix to become more conservative as the investor nears their retirement age. Basically an adjustment to the portfolio’s risk profile over time.

Merton states that technology underlies the promise of reverse mortgages, a financial innovations as he calls it, that can solve problems across the globe. Another challenge is consumption coupled with longevity…

Download a transcript of this episode here.

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  1. Great share Shannon. We really appreciate all you do to educate others.

    • Kent, Thank you kindly. Encouraging news is pleasant to share indeed.

  2. We are beginning to see departures in the standard views about reverse mortgages. Yet this process promises to be just as hard and arduous as the start of the breakthrough. Yes, our endorsements will increase as more of the economic and financial intelligentsia begin realizing the need and value of a cash flow product in increasing and extending the cash inflow generated in the decumulation phase of the financial life cycle yet the change will not be overnight.

    Although there are substantial crossovers in discussing cash flow, income, expense, assets, and liabilities with seniors, each of these financial categories are also separate subjects which need to be explored by retirees so as to preserve as much cash as possible for use throughout what are becoming ever longer retirements.

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