High-net-worth retirees’ investments may be ‘dragged down’ by non-working assets


Certain assets that cost money over time could have a negative impact on investments and retirement, according to a financial advisor who works with mass-affluent retirees. This could play into certain reverse mortgage conversations.

Many outsiders often see the reverse mortgage industry as a “loan of last resort” for financially distressed seniors, a tagline that the industry itself has had a conflicted relationship with.

But in recent years as more industry professionals and companies have offered proprietary alternatives to the government-backed Home Equity Conversion Mortgage (HECM), wealthy seniors have become a more viable cohort as potential clients. These seniors may still have financial issues to address, though.

One such issue is a portfolio that includes “working” versus “non-working” assets, and one financial advisor is aiming to call attention to the latter in a new piece at InvestmentNews.

Michael Landsberg is a partner and the chief investment officer at Florida-based Landsberg Bennett Private Wealth Management, a firm that manages roughly $1 billion in assets for mass affluent retirees. These older Americans have a lot of assets in the forms of multiple homes, cars and boats, which leads to discussions with those clients about the differences between such assets.

“Nonworking assets cost money,” according to the column. “The vacation home, the second or third car, and the boat all require money, time, and effort to maintain. Working assets, such as rental properties or stocks, generally produce income and don’t involve tremendous financial expenditures to maintain.”

Assessing the role these assets play in an overall retirement strategy and investment activity is important in the pursuit of maintaining long-term financial stability. The home (or homes) may have an outsized role to play.

“Landsberg said that it’s important for retirees to reassess these assets and consider downsizing their home or selling the unused vacation home, in an effort to streamline their financial life and shed assets that are costing money to maintain and keep every month,” the column said. “Many nonworking assets look attractive on paper, but they’re actually financially problematic.”

Landsberg recommends downsizing since it could allow certain clients to avoid relying on debt in their later years, and it helps avoid the stress of maintaining multiple homes. While he doesn’t specifically mention reverse mortgages, Landsberg says many of his clients own their homes free and clear.

Reverse mortgages are not an option for second homes. The occupancy requirement precludes a client from taking out a reverse mortgage on a home they do not occupy as their primary residence.

However, retirement professionals and educators like Wade Pfau and Steve Resch have presented a reverse mortgage as a viable vehicle for more affluent retirees who can use a standby line of credit as a buffer against market volatility, protecting investment accounts.

This could be an avenue for discussion with more affluent retirees, especially since they have expressed doubts about achieving an optimal retirement in the past.



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