Monthly Archives: November 2017

Patriot Lending — unparalleled service.

OUR VISION

To make retirement free of financial woes. Our dedicated, diverse, and determined staff are available to you 24/7 to hone in on the financial product that most fits your needs. The managerial staff at Patriot Lending has been able to compile a team of qualified professionals to assist you in any way possible.

The financial tools we offer are available at many other financial institutions but, we believe that the service we offer here at Patriot Lending is unparalleled.

Are you ready to embrace the flexible, affordable, hassle-free benefits of a reverse mortgage? Call us today to begin the journey towards the home of your dreams!

Consider talking to a reverse mortgage specialist here in Arizona 928 345-1200 or email warren.strycker@patriotlendingreverse.com, or access more HECM reverse mortgage information to get started — click here:

www.patriotlendingreverse.com

6 questions — Take time to get affairs in order — 928 345-1200

Let’s have a conversation today. If you are looking for some answers to the HECM puzzle… answer some of ours — call me (Warren Strycker) 928 928-1200 to start this conversation — let’s talk about HECM. (Strycker is a veteran fully licensed HECM advisor — you’ll get some valuable insights from him).

  1. What year were you born?
  2. Which income streams (will) fund your retirement? a. Pension income; b. 401k distributions; c. Selling home to access equity;  d. An annuity or another income vehicle. Will any of these income streams provide a credit line that grows and doesn’t have cost?
  3. Are you or your spouse currently receiving Social Security? yes or no
  4. Are you still working? Are you retired from working?
  5. How secure do you feel in your current retirement portfolio to provide monthly income you need to support ideal lifestyle? 1 through 5.
  6. Do you currently own your home? Are you making mortgage payments now?

 

Yes, I have one of these on my own home (and it’s OK to talk to me about it).

 

Let us be thankful.

These thoughts by Warren Strycker

I am thankful for the things I don’t want or like, because God teaches me about waiting, and patience, and faith, and for one of my Facebook friends that made me think of it.

I’m thinking about those that fail, and keep going, that cry and are not consoled, that try again when what they just did, didn’t work (again), and for those who scream out in pain without a ready fix.

I’m thinking for all the sports players who lost their games, churches that came out of the shute strong and came to naught, politicians who lost their elections again and again, because, in the end, their losses forge the completion of God’s plan for them and us, down the road, and around the corner when it’s time to win or lose, again and to know for sure that we don’t all have the power to succeed in the way we imagined.

Our visit on the earth is God’s experiment as he guides the events that lie ahead, with a firm hand. Lives and egos are lost in the process but the Plan he had from the beginning is continuing over the rough roads we travel.

From the beginning, God formed our thoughts and projects – mostly for his own plan for the world – and who would miss it, staring up into the sky at night as the stars reflect the Glory of the Creator?

My neighbor, the pastor, doesn’t think we are supposed to understand the process of life, though I try again and again to comprehend it – usually at Thanksgiving time.

It is enough to be thankful that we are not in charge of the chaos in the world or that our illusions of grandeur don’t happen as we planned.

We can be thankful that we accept Thanksgiving as the process of our beginning and all the wins and losses in between.

Let us be Thankful.

Editor’s note: This is not a new Bible. I expect this to be edited as new things and old are remembered and added to it. Life, after all, is God’s experiment, and we are just the ingredients as we all stir them together like a Thanksgiving salad in the making. There is so much more to know. (Sorry Pastor John, I hear you but I am not convinced that God gave us brains not to be used).

 

“Organizing for Action”

Charles Krauthammer

I do not understand how living in a country with its democracy established over 200 years ago, and now, for the first time in history, suddenly we have one of our former presidents set up a group called “Organizing for Action” (OFA).

OFA is 30,000+ strong and working to disrupt everything that our current president’s administration is trying to do. This organization goes against our Democracy, and it is an operation that will destroy our way of governing. It goes against our Constitution, our laws, and the processes established over 200 years ago. If it is allowed to proceed then we will be living in chaos very much like third world countries are run. What good is it to have an established government if it is not going to be respected and allowed to follow our laws?

If you had an army some 30,000 strong and a court system stacked over the decades with judges who would allow you to break the laws, how much damage could you do to a country? We are about to find out in America!

Our ex-president said he was going to stay involved through community organizing and speak out on the issues and that appears to be one post-administration promise he intends to keep. He has moved many of his administration’s top dogs over to Organizing for Action.

OFA is behind the strategic and tactical implementation of the resistance to the Trump Administration that we are seeing across America, and politically active courts are providing the leverage for this revolution.

OFA is dedicated to organizing communities for “progressive” change. Its issues are gun control, socialist healthcare, abortion, sexual equality, climate change, and of course, immigration reform.

OFA members were propped up by the ex-president’s message from the shadows: “Organizing is the building block of everything great we have accomplished Organizers around the country are fighting for change in their communities and OFA is one of the groups on the front lines. Commit to this work in 2017 and beyond.”

OFA’s website says it obtained its “digital” assets from the ex-president’s re-election effort and that he inspired the movement. In short, it is the shadow government organization aimed at resisting and tearing down the Constitutional Republic we know as AMERICA.

Paul Sperry, writing for the New York Post, says, “The OFA will fight President Donald Trump at every turn of his presidency and the ex-president will command them from a bunker less than two miles from the White House.”

Sperry writes that, “The ex-president is setting up a shadow government to sabotage the Trump administration through a network of non-profits led by OFA, which is growing its war chest (more than $40 million) and has some 250 offices nationwide. The OFA IRS filings, according to Sperry, indicate that the OFA has 32,525 (and growing) volunteers nationwide. The ex-president and his wife will oversee the operation from their home/ office in Washington DC.

Think about how this works.. For example: Trump issues an immigration executive order; the OFA signals for protests and statements from pro-immigrant groups; the ACLU lawyers file lawsuits in jurisdictions where activist judges obstruct the laws; volunteers are called to protest at airports and Congressional town hall meetings; the leftist media springs to action in support of these activities; the twitter sphere lights up with social media; and violence follows. All of this happens from the ex-president’s signal that he is heartened by the protests.

If Barack Obama did not do enough to destroy this country in the 8 years he was in office, it appears his future plans are to destroy the foundation on which this country has operated on for the last 241 years.

If this does not scare you, then we are in worse trouble than you know.

So, do your part. You have read it, so at least pass this on so others will know what we are up against. We are losing our country and we are so compliant. We are becoming a “PERFECT TARGET” for our enemy!

Charles Krauthammer

Seniors spend less and less as they age. True or False?

by Wade Pfau, Ph.D., CFA

August 3, 2011

Today’s classic withdrawal rate study is Ty Bernicke’s “Reality Retirement Planning: A New Paradigm for an Old Science,” from the June 2005 Journal of Financial Planning.

A common assumption for retirement withdrawal rate studies, which I’ve used in all of my own research, is that retirees will adjust their withdrawal amounts for inflation in each year of retirement.  The assumption is that retirees will want to spend the same amount in real, inflation-adjusted terms for as long as they live.

Ty Bernicke challenges this assumption in a rather significant way.  If he is right, then we are playing a whole different ballgame and the 4% rule falls by the wayside. His argument is that as retirees get older and older, they voluntarily reduce their spending. They are just not as interested or able to travel as much, go to so many restaurants, and so on.

I’m not sure if he is right or not, but this is a matter I would like to explore some more, as it is quite important. What percent of the population maintains constant spending?  What percent do voluntarily reduce their spending? What percent are forced to increase spending due to entering a nursing home or experience large medical bills?  What is the appropriate default assumption? Mr. Bernicke says that reduced spending is true for his clients, which I can fully believe.  People who use financial planners are probably more on top of their finances and may find that they can voluntarily reduce spending.  But I’m not necessarily convinced that this will be true for everyone or that do-it-yourselfers should rely on the notion that they will not need to spend as much as they get older and older.

Mr. Bernicke uses evidence from the Consumer Expenditure Survey (CES) to show that those aged 75+ spend less than those aged 70-74, who spend less than those aged 65-69, who spend less than those aged 60-64, who spend less than those aged 55-59.  This particular results seems hard to dispute, though like all of his results, it is based on aggregate numbers.  These are just the averages by age group, but how much variation is there within each age group?

One possible explanation for this reduced spending is the cohort effect: different age groups just happen to spend differently for reasons unrelated to age.  He checks this as well by comparing the 1984 and 2004 CES surveys and finds further evidence for the reduced spending.

In order to argue that these reductions are voluntary, he refers to data on median net worth by age and household income quintile to show that older people have more wealth than younger people within each income quintile. If older people are wealthier but are spending less, he concludes that the spending reductions must be voluntary. Again, these are all still just averages. Jonathan Clements brings up a valid criticism of this, though, in a 2006 Wall Street Journal article. These income quintiles are defined for the whole population, and a much higher percentage (43%) of the 75+ individuals are in the bottom income quintile.  This makes the comparisons somewhat meaningless. As well, Mr. Clements notes that the median net worth of those aged 75+ is $100,100.  But after removing home equity, the median net worth is only $19,205.  This would explain lower spending levels very well.

Beyond this as well, since Social Security is adjusted for wage growth prior to retirement but inflation after retirement, older retirees will naturally have lower benefits than younger retirees, another reason for less spending. I haven’t used household data very much in recent years, but a paper that I wrote as part of my dissertation does also show that poverty rates are higher for the older retiree age groups than the younger retiree age groups.

Getting back to the results of Mr. Bernicke’s paper, he then explores the implications of lower spending with a Monte Carlo simulation example.  Assuming 3% inflation, he assumes that retirees increase their spending by inflation, but at the same time tend to reduce their overall spending as well.  Spending fluctuates, but these two effects mostly cancel out so that nominal spending stays close to its initial value. This allows the failure rate in this “reality case” example to be 0% compared to 87% for the traditional case of constant inflation-adjusted spending.

If we can assume that a retiree’s spending stays the same in nominal terms, the initial withdrawal rate can be higher.  Here is a figure I made before with Trinity Study data comparing the inflation-adjusted case with the no inflation-adjustments case.

With no inflation-adjustments, the SAFEMAX (lowest sustainable withdrawal rate in history) was a little above 5.5%, as experienced by the 1929 retiree.  However, this is a bit misleading, because the Great Depression was also a time of sustained deflation, with prices falling 24 percent between the start of 1929 and the start of 1933. The January 1929 price level was not seen again until 1943. Thus, even though nominal spending stayed the same, the spending in real terms would have grown.  Aside from the deflation-case of the Great Depression, we are looking at a SAFEMAX of more like 6.5 percent.  Retirees who plan to reduce their spending as they get older and older can withdraw more at the beginning.

But what is the best assumption to use: constant inflation-adjusted spending, or decreased spending as one ages more?  This is a big question that I think is still not fully resolved.  I’d like to find a Ph.D. student willing to dig more into the household survey data and to classify different retirees by their spending patterns over time using surveys that do indeed track the same households over long periods.

Retirement Researcher is owned by McLean Asset Management Corporation (MAMC), which is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.

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Editor’s Note: So, our question is this: If seniors had more income available, would they spend more or less? And, another question: Do seniors stick by their “guns” on the opportunity that reverse mortgages offer, because they are proud of their decision to spend less and not more when they could? And another question comes to mind: Are seniors being honest when they quickly respond with a “we’re fine” response when they are truly “not fine at all”, going through much of their retirement cycle, “payday to payday” hoping to escape the pressures that such a lifestyle offers, without responding stubbornly to any kind of fix at all — even when it’s offered as a transition to a much more peaceful replacement such as using a HECM reverse mortgage to smooth out the spikes in income from home equity?

My aged father once set me straight on this. He remembered 1929 when there wasn’t any money so he refused to spend what he had for fear he would run out. As it worked out, I spent his money on his heirs as distributor of his estate, taking my share of it in stride because he wouldn’t budget when he could have.

Those who consider a HECM reverse mortgage will have more to spend. That’s the point of this. See contact information on the tool bar “Information” on home page to further this discussion.

 

CUT through Gov’t CRAPOLA on HECM Reverse Mortgages.

What the 2016 Survey of Consumer Finances tells us about senior homeowners — take a look for yourself…

‘Impediments to extracting home equity (HECM Reverse Mortgage) can be attributed to factors that include an aversion to debt and a general desire to stay financially conservative (Kaul and Goodman 2017), a desire to leave a bequest or save for emergencies, fear of losing the home, product complexity, high costs, and fear of misinformation and fraud directed at the elderly.’ (Editor’s note: these same people can have what they want with a HECM Reverse Mortgage —

 

 

Click on this link to gather up this story online. what-the-2016-survey-of-consumer-finances-tells-us-about-senior-homeowners