The Threat: Sequence Risk. The Solution? A Reverse Mortgage Loan

Posted: June 1, 2022

The joy of retirement can be overshadowed by a slew of financial challenges — from inflation to rising medical costs to market fluctuations. But what your clients might not be familiar with is the sequence of returns risk, also referred to as sequence risk.

Sequence risk arises from the order in which investment returns occur. For example, if the market declines early in retirement, and an individual continues to make withdrawals, this could result in negative portfolio returns later on, making it very difficult to recover. Add in the ongoing inflation mess and today’s retirees have some serious financial threats on their minds.


Saving their savings

To protect a retirement account from the damage of sequence risk, your clients may consider the following strategies:


  • Diversifying their portfolio by investing in high-quality bonds
  • Working past retirement age and contributing more to their retirement account
  • Saving and investing during retirement, as much as their income will allow
  • Considering a buffer asset to avoid selling at losses — like a reverse mortgage loan


Tapping into home equity wealth

Homeowners ages 62 and older have collectively amassed $10.19 trillion in home equity. By leveraging this resource, your clients may get the cash flow they need to avoid selling investments during an unfavorable time. This strategy can help maintain investments, increase the longevity of their portfolio, boost their retirement wealth and build a safety net for the years to come.

A reverse mortgage can be an effective financial tool for the right candidates. Contact your Account Executive with any questions on how RMF can help you grow your business with this opportunity.