Debt as a financial planning instrument should not be overlooked, even if older Americans may be averse to it, according to Jamie Hopkins, managing partner of wealth solutions at Carson Group — and that should include the consideration of a reverse mortgage. Hopkins noted this in a .
Hopkins, who co-wrote a book titled “Find Your Freedom: Financial Planning for a Life on Purpose” with Carson Group Founder and CEO Ron Carson, discussed how debt can be leveraged for financial growth in a recent interview with ThinkAdvisor.
According to Hopkins’ book, “debt be a powerful planning tool that helps us open up possibilities in life that you wouldn’t have expected without it.”
When asked by ThinkAdvisor to elaborate on the concept, Hopkins noted that some of the biggest, most successful companies in the world leverage debt in order to initiate growth.
“Debt is a very powerful growth vehicle,” Hopkins said. “So you should always look at what [rates] you can borrow at and what you can leverage elsewhere. That should be an annual decision. For Americans, the two biggest debt decisions are college education and buying a house. Also, you might have debt that comes in on your business side.”
Any time someone borrows money, they make a decision regarding how much to borrow versus how much to invest, Hopkin said — and seniors should not be absent from the discussion about debt-based instruments.
“Even if you’ve paid off your mortgage and you’re 62, you’re making an annual decision as to whether, for example, you should pay all taxes [with cash], refinance your mortgage or do a reverse mortgage,” Hopkins said.
In the interview, Hopkins was also asked about the concept of conservative investing in the five years preceding and after retirement.
“Historical data supports the fact that the worst-case scenarios are when you take a lot of risk right around the time you retire and the markets pull [back] when you have to take a distribution,” he said. “The argument is that you should get a little bit more conservative right around retirement, and then you can increase your total percentage in equities over time throughout retirement.”
Read the interview at ThinkAdvisor.
