Q: "Can seniors insure themselves against running out of money?" A: If they have significant equity in a home they occupy as their principal residence, the answer is "yes," the HECM reverse mortgage administered by FHA can be used for this purpose. (HECM stands for home equity conversion mortgage.) The problem: Millions of seniors retire with a modest nest egg that they intend to use up during their retirement years, but face the risk that their funds will be fully depleted while they are still alive. They may follow the advice of a financial planner who tells them how much of their fund they can draw each year consistent with a low probability of running out of money. However, a low probability of going broke can be a source of continued anxiety. A standard remedy for anxiety associated with low-probability hazards to life, limb or pocketbook is insurance. In this case, the insurance is provided by the federal government with the HECM reverse mortgage ...
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