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Reverse Mortgages As a Source of Retirement Income

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Reverse mortgages make sense for retirees who wish to remain in their home, who need some additional income and who are not concerned about leaving the equity in their home to their heirs, says Wade Pfau, professor of retirement income at The American College of Financial Services in Bryn Mawr, Pennsylvania.

“It can be an effective part of a retirement income plan, but it is going to have a bigger impact for the middle class or the mass affluent because the reverse mortgage is calculated only on the first $636,150 value of the home,” Pfau says.