October 2022: A Note from Actuary Peter Neuwirth — I invite you to tune in for this month’s episode of my podcast and video show, Money Mountaineering, where for 30 minutes, we learn from experts how to plan for your best financial future.

Today’s Topic: From reverse mortgages to leaving a legacy, learn how to generate lifetime income

Meet today’s guest: Barry H. Sacks Ph.D. earned his Ph.D. in semiconductor physics from M.I.T., then taught at U.C. Berkeley. He earned a J.D. from Harvard Law School and is a Certified Specialist in Taxation Law from the California Board of Legal Specialization. After spending 35 years as an ERISA attorney specializing in qualified retirement plans, he used his breadth of skills to discover a role for a reverse mortgage to help make a retirement portfolio last longer. Barry now has a law practice providing exceptional services to tax professionals in the area of “Offers in Compromise” for retirees living on 401(k) accounts or securities portfolios.

With his brother, Professor Stephen Sacks, Barry published the pioneering research paper modeling a strategy that uses reverse mortgage credit lines to mitigate the effects of adverse investment returns in retirement accounts (Journal of Financial Planning, February 2012). A sequel to this paper expanding the range of applications of the strategy was co-authored by Peter Neuwirth, F.S.A., and Stephen Sacks. Read all about it. While developing his model for reverse mortgages in retirement income planning,

Barry became aware of the particular needs of retirees and soon-to-be retirees in the process of divorce. These needs are particularly concerning in cases where the retirement savings are divided between the parties or where one of the parties has received most of the retirement savings but not much of the home equity value: Read more here. Barry is a frequent speaker on those subjects, live and in webinars, to financial planning groups, estate planning and trust attorneys’ and accountants’ groups, reverse mortgage lenders’ groups, and graduate tax seminars at law and business schools. He lives in San Francisco and Sonoma, except when traveling faraway exotic places.

In this month’s interview, Pete asks Barry:

• Tell us about your decision to leave his tenure track position as Berkeley physics professor in Quantum Mechanics to become an ERISA lawyer. You are one of the best tax lawyers I know; was that a tough decision? Also, talk a bit about how we met when you were an ERISA lawyer and I was the actuary for the San Francisco Symphony.
• How did you develop your groundbreaking 2012 paper that replaced the 4% rule with the “coordinated strategy” involving a reverse mortgage, which was reported on by Forbes magazine and other noteworthy publications?
• Let’s talk about how your excitement got me interested in the subject and how we started working together to expand the applicability of reverse mortgages and our joint 2017 paper on the topic
• Over the last few years, we have extended the concept further to look at the entire decumulation problem, including Legacy and components of net worth throughout retirement. This resulted in our 2022 paper published by the Conference of Consulting Actuaries. please talk about this research and why more people need to understand
• Our current research takes a deeper and more detailed look at the decumulation problem and its four unique risks below. While none of these are present to any material degree during accumulation; all four need to be considered by a new retiree:
  • Sequence of Returns
  • Unpredictable Contingent Expense (i.e., Spikes)
  • Longevity
  • Taxes

Stay tuned for our conversation — and for next month’s guest: Reverse mortgage specialist Mary Jo Lafaye, creator of 62CashFlow.com. A longtime colleague from Mutual of Omaha, Mary Jo, works closely with Barry and me on these topics and figures prominently in this discussion. We look forward to sharing all of this information with our audience.

Learn more about actuary and author Peter Neuwirth: www.PeterNeuwirth.com

• Listen to Pete’s podcasts on PeterNeuwirthRadio.com
• Watch all of the video episodes on YouTube: www.PeterNeuwirth.tv