ASANCOA CONFERENCE

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ASA-NCOA CONFERENCE

• RETIRE ON THE HOUSE?

Walter Updegrave Senior Editor, MONEY
Magazine MARCH 9, 2007
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NEST EGG REALITY CHECK

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NEST EGG REALITY CHECK
Age Average Balance 40s 91,848 50s
127,766 60s 140,957 All Ages 102,014
Source EBRI-ICI 401(k) Report, August, 2006
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HOUSING TO THE RESCUE
2001 2006
gain U.S. 156,600 222,000 42 Los
Angeles 241,400 584,800
142 Miami 157,700 371,200 135 Las
Vegas 149,100 317,400 113 Washington,
DC 204,100 431,000 111 SP
500 24
Source NAR, median sales prices
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PRICES CAN GO DOWN TOO
decline U.S. Median -3 Sarasota,
FL -18 Reno, NV -9 Columbus, OH -6 San
Diego -5 MSAs with price decline 73
of 158
Source NAR Note 4th qtr 06 vs. 4th qtr 05
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AND STAY DOWN A LONG TIME
Housing Bust of the Early 90s
Years to Peak
Trough Regain Peak Los Angeles
3 Qtr 90 1 Qtr 95
9.5 -21 2 Qtr 2000 New
York City 1 Qtr 89 4 Qtr 94
8.8 -9 1 Qtr
1998
Source OFHEO
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REVERSE MORTGAGES CAN HELP
220,000 Value
Financial FHA Fannie Mae
Freedom Cash/line of credit
108,712 39,149 73,954 Monthly
income for life 677 320
N/A
Source Financial Freedom RM Calculator Note
Assumes no debt on home, 65-year-old owner, New
Rochelle, NY
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BUT MAY NOT BE THE BEST SOLUTION
Extra annual Present
Value of Scenario cash flow
Cash and Inheritance
Reverse Mortgage 6,470
240,487
Sell old home/ Buy new one
4,831 359,273
Sell/Buyand take out HELOC 7,413
362,782
Sell/Buyand do reverse mortgage
9,601 333,653
ASSUMPTIONS 400,000 house, no mortgage debt,
62-year-old couple, 32-year planning horizon,
25 tax bracket, new house 300,000 Source
Fidelity Research Institute
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SCHEMES AND SCAMS
gtLiving Trust Mills gtVariable
Annuities gtEquity Index Annuities gtOther flim
flams
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ASA-NCOA CONFERENCE

• RETIRE ON THE HOUSE?

Walter Updegrave Senior Editor, MONEY
Magazine MARCH 9, 2007