Retirement Saver

Enter Your Proposed Savings Plan and Other Factors Affecting Your Retirement

Personal Details
Current Age
Gender
Retirement Age

Annual Growth Rates
Return on Financial Assets		%
Home Value Appreciation		%
Annual Increase in Payment

Annuity
Use an Annuity
Cash Refund Option
Deferment Period (years)

Assets & Liabilities
Financial Assets	$
Current House Value	$
House Zip Code
Current Mortgage Balance	$
Mortgage Payment	$
Mortgage Interest Rate		%

Savings Plan
Frequency	Amount	Start in Month #	Duration	End in Month #	Annual Increase
	$				%
	$				%
	$				%
	$				%

Desired Monthly Income
	Calculate savings needed for the desired monthly income after retirement:
Desired Monthly Income:
$

Earning Interest on Financial Assets

Since you have significant financial assets for your retirement plan, you can enter a positive rate of return on those assets. If you leave the rate at zero, in all probability you will have excess financial assets and/or HECM credit line at the end of 10 years when the annuity payments begin. You can view that as a bonus that you can use in any way you see fit.

If you enter a rate of return above 0%, your spendable funds line will be higher. However, if the realized rate of return turns out to be lower than the rate you enter, your spendable funds will dwindle until the annuity begins. The annuity amounts will not be affected by a rate shortfall.

Additional Details

RFI uses a portion of your financial assets and/or your HECM borrowing power to purchase a deferred annuity; you draw on the remaining portion of your assets / HECM Credit Line during the deferment period to fund your spending needs. Of course your outstanding financial asset balance earns a rate of return during the deferment period, and your HECM Credit Line grows at a rate equal to a market interest rate + the margin on the HECM + the MIP on the HECM (the latter two are fixed in the HECM contract and cannot change).

In order to be as conservative as possible to minimize the risk of running out of funds/credit line during the deferment period, the RFI plan presented here assumes that your rate of return on financial assets will be zero during the deferment period, and the market interest rate on the HECM will also be zero during the deferment period. Of course this is very unlikely; in all likelihood rates will be greater than zero, in which case you will have excess financial assets and/or HECM credit line at the end of the deferment period which you can use in any way you see fit.

Additional Details

Relative to the amount of home equity that you have, your financial assets are too low to use this plan..

Return on Financial Assets: The average average annual money you make on your financial assets. The table below shows typical returns from 1926 - 2020 based on your allocation between fixed income and equities investments.

Fixed Income	0%	20%	40%	60%	80%	100%
Equities	100%	80%	60%	40%	20%	0%
Top 10% Annual Return	17.28%	15.40%	13.82%	12.51%	11.07%	9.59%
Average Annual Return	11.43%	10.49%	9.14%	7.45%	5.57%	4.54%
Bottom 10% Annual Return	4.00%	4.66%	5.02%	4.97%	4.08%	1.81%

Home Value Appreciation: Over long periods, home values have appreciated about 4% a year, and this value is used by HUD in stipulating the withdrawal amounts on HECM reverse mortgages. Homeowners who have good reasons to believe that their home will appreciate faster or slower than the average can modify the appreciation entry accordingly.

Mortgage Payment: The amount you are currently obliged to pay monthly toward the principal and interest of your mortgage.

Mortgage Interest Rate: The current annual interest rate on your mortgage.

Cash Refund Option: If you select this option and you die before the total amount of the annuity payments you've received exceeds what you paid for the annuity, your heirs will receive the difference. For example, if you die during the annuity deferment period (i.e. before any payments have been made) your estate will receive back the total amount you paid for the annuity. Note that selecting this option will reduce the monthly annuity payments.

Deferment Period: The amount of time between when you purchase an annuity and when you begin to receive monthly payments from the annuity.

This section of the chart shows monthly annuity income, which begins in 0 years at and increases by 2% a year. You pay for the annuity now with part of your assets, in exchange receiving an income stream for life starting in 0 years. The remainder of your assets will be used for spendable funds during the 0-year annuity deferment period.

In your case, of your financial assets are used to purchase the annuity.

RFI selects the Deferred Income Annuity that results in the highest monthly income from a network of annuity companies rated A or higher by AM Best. Click the 'Annuity Pricing' button to see how RFI’s automated shopping can increase your annuity income.

During the 10 year annuity deferment period spendable funds are provided by a combination of a HECM Term Payment and draws from your remaining financial assets. The blue area of the chart is the 10 year HECM term payment, which in your case is per month.

RFI uses a network of HECM reverse mortgage lenders to find the best “price” for the reverse mortgage. Click the 'HECM Pricing' button to see the range of term payments that are available on the network – RFI automatically selects the lender offering the largest term payment.

HECM term payments are augmented by draws from your remaining financial assets () to provide spendable funds during the early years of the plan – this is shown in the red section of the chart. Spendable funds grow at 2% per year and provide a smooth transition to the start of annuity income in 10 years.

Chart Notification

How does this retirement plan work?

The plan shows how the assets you will have at retirement can be used to create a "personal pension" that provides a lifetime stream of income
At retirement, part of your assets are used to purchase an annuity that is guaranteed by an insurance company to pay you every month for life
Three different scenarios are shown: (1) only your current financial assets are used to fund the plan, (2) the additional savings you specify are added to your current assets to fund the plan, and (3) your home equity - in the form of a reverse mortgage - are added to your financial assets + savings to fund the plan
Changing your savings plan shows you how increasing savings increases the amount you will have to spend in retirement

Tip

You can place the cursor over the chart to view the chart values.

Don't show this tip again.

Annuity Pricing

HECM Pricing

Walk-Through Tutorial

The walk-through tutorial can be used once you are viewing your RFI Retirement Plan.

The RFI generated chart above is one possible retirement plan for you, but it is not necessarily the best plan possible.

A different annuity deferment period might result in more spendable funds.
You might prefer a pattern of spendable fund that changes over time (i.e. differs from the annual 2% increases shown in the chart).
You might want a rider on your annuity that provides a refund of premium in the event of early death.
The graph does not show changes in your estate value, which might be important to you.
Tax consequences (including whether some or all of your financial assets are in ordinary or tax deferred accounts) are not taken into account.

These or other issues involved in designing a plan that best meets your needs can be discussed with a Mortgage Professor representative who has access to the full RFI technology.

Need Help?

There are two ways you can receive help from The Mortgage Professor or one of his counselors. You can request someone to call you or you can send a question and someone will email you the answer.

Request a Call

Select from the available times:

... Loading Session Times...

Your First Name:
Your Phone Number:

Request an Email Response

Enter your question:
Your Email Address:

See our Privacy Policy

Your question has been sent. Someone will respond by email as soon as possible.

Your session has been booked. You will receive a call at the phone number you provided.

Privacy Policy: Your phone number and email address will only be used to answer your question(s). You will not receive calls or emails from other parties and your personal information will not be sold or given to any other parties.

	Home
	What is RFI?
	Run RFI
	Retirement Articles
	Tools