A new book on reverse mortgages hit the shelves this past weekend, offering readers a comprehensive guide on the valuable role home equity plays in retirement income planning.

“Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement” (Retirement Researcher Media, 2016) by Wade Pfau, Ph.D., CFA, principal and director of retirement research at McLean Asset Management in McLean, Va., is the latest manuscript detailing the efficacy of reverse mortgages as a retirement income strategy.

The book, released September 18, provides a framework for retirement income planning, including a discussion on the different challenges and philosophies for creating a financial plan that works best for an individual’s particular circumstances. This helps set the stage for an in-depth analysis of reverse mortgages.

“Reverse mortgages are still a niche topic in retirement income planning, but I think it’s going to grow and more attention will be paid to it,” Pfau told RMD. “In the financial planning community there is still an opportunity to be an early mover into this area as more consumers and financial planners take a closer look at this topic.”

Pfau, who also serves as a professor of retirement income in the Ph.D. program for Financial Planning and Retirement Planning at The American College of Financial Services in Bryn Mawr, Pa., has extensively researched and written articles about the various, strategic uses of reverse mortgages within the context of financial planning.

Like much of Pfau’s writing, which frequently appears in Forbes and The Wall Street Journal, the target audience for “Reverse Mortgages” is a combination of both financial advisors and “sophisticated” consumers—those who have a basic financial literacy and read a lot about financial- and investment-planning related topics.

“Reverse Mortgages” provides a historical background of reverse mortgage in the U.S. before moving into more complex subject matter on how these products work, including a section on their potential uses and how these loans fit into portfolio coordination for retirement spending.

The book also features new research from Pfau on the reverse mortgage tenure payment as an annuity alternative, and also compares some of the most critical research that has been published on reverse mortgages in retirement income planning over the years.

“There hasn’t been a lot of quantification about which strategy works best in which circumstances,” Pfau said. “This is the first book that compares the Sacks’ strategy against the Texas Tech Strategy, as well as against other strategies.”

Pfau’s book is the most recent published work that explores reverse mortgages and their financial planning capabilities. Other notable works include “What’s the Deal with Reverse Mortgages?” written by industry veteran and Chair of the Funding Longevity Task Force Shelley Giordano; and “Understanding Reverse 2016” from Dan Hultquist, a Certified Reverse Mortgage Professional and now director of learning and development at ReverseVision.

Whereas Giordano and Hultquist have written their works as direct participants in the reverse mortgage industry, Pfau’s “Reverse Mortgages” comes from the periphery with a financial planning perspective.

“This is one of the few books out there not written by someone in the [reverse mortgage] industry,” Pfau said. “It’s coming from a different perspective—a broader perspective of how reverse mortgage work, but here’s how you can think of them as part of a retirement income plan.”

The book, “Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,” is currently available for purchase on Amazon.

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Tom Davison: I reviewed Wade’s book on Amazon, saying:

Wade Pfau’s book provides a clear, concise and insightful study of reverse mortgages in retirement planning. Wade has created state of the art tools to understand how reverse mortgages impact retirement spending, including improvements from refinancing traditional with reverse mortgages. Readers will gain new insights and appreciation of value a reverse mortgage brings to homeowners in retirement. While written for the general public, all financial planners involved with retirement planning will benefit greatly from the insights in this book.

Reverse mortgages have been around going on 30 years to help homeowners who are age 62 or older. But in the last three years they should be thought of as “The New Reverse Mortgage”, due to both product changes and research on using them as an important financial planning tool for retirement. Wade Pfau has pulled all this together and significantly extended the research in this book. One key new contribution shows that retired homeowners with a mortgage may be significantly better off refinancing their traditional mortgage with a reverse mortgage, rather than just paying if off over time, or paying it off early from other resources. To see the full scope check out the chapter titles.

Reverse mortgages are simple in that they provide homeowners access to cash. The amount of cash, if left in the reverse mortgage line of credit, can grow significantly over the course of retirement. As cash, it can be put to many uses – the opportunity is there to use it differently for different people. A challenge is how to think about high value ways to use it, and that is where Wade’s book really shines.