Is Retirement Just a Math Problem? With Dr. Wade Pfau

0:02 In the process of doing reverse mortgages, there's a lots of analysis and numbers that go on. And if there's one person who I've had quoted to me and had his books mentioned more than anybody, I want to say 80 to 90% of the authority of the reverse mortgage math particular when it comes to as retirement tool is Dr. Wade Pfau. I'm really excited to have him back again today as a guest on our Reverse Mortgage Podcast. Dr. Pfau, thank you so much for coming back.

0:27 Absolutely. Thanks for having me again, Bill. And so I know that, you know, given your, you know, having read your bio and having you before, and I know that you have a very strong academic background, I think the thing I'd like to do is present some of that authority to those of us who are professionals of business don't have maybe that deep sense. And so, you know, one of the things I've heard you say is that math works differently in retirement than during the work years. Describe what that means because to us, math is 2 plus two equals four no matter what, retirement or work. I guess there are some different situations where the math does work a little differently. [laughter]

1:05 Yeah. So that issue is primarily around the idea that when you're still pre-retirement, you manage your spending needs through your income from work. You're getting a salary. Hopefully, you're setting aside part of the salary is saving for retirement, but for the most part, you're living off your employment. And that gives you more capacity for market risk that there's market volatility, but you can endure that because you're not dependent on those assets to meet your expenses. You're meeting expenses through your employment. Postretirement though, you become dependent on spending from your savings. And that's where the math can change because it creates a situation where like when you're saving for retirement, a market downturn can actually help you if you're able to just not panic because you can buy your new savings will purchase shares at a discounted price. But when you're postretirement, a market downturn, if you have to sell from a portfolio that's declining in value, you have to sell a bigger percentage of what's left to meet your expenses. And that can dig a hole that's hard to recover from. And so market volatility has a bigger impact on retirees. And that's really the idea behind how the math changes in retirement.

2:17 You know, it's I'm a real estate broker with eXp Realty and I get certain compensation in stock and the stock has, you know, underperformed what it did the first years I was with the company when I accumulated a lot. And my wife's panicked because she sees the price down. I said, "But honey, we're still buying stock. We're not selling any of it. Our concern is where is it going to be five or 10 years from now when I stop working and maybe we need either the dividends and or we need the to sell stock you know to live but for now I'm glad to get 25% more stock for my you know incentives and it kind of works out that way. So that's really the where it's the same math but it just depends where you are in the spectrum of buying or selling I guess is what you're really saying

2:55 Right? Yeah, that's a great way to put it. And it's like I've heard the expression too that dollar cost averaging or the idea that when you're buying in overtime, you get to buy more shares at the discount. I've heard it called dollar cost ravaging in retirement where right if you have to sell shares, that's where the market downturn really hurts,

3:13 Right? Yeah. I'm not really much a speculative, but a couple stocks I'm involved with my business and every time they go down, I buy a little more because I know in the long run they're going to do well. Now, I'm making that gamble. I've been right so far, but we'll see. Another area where the math is different based on timing is a line of credit. And I had a previous episode where we actually went through a scenario of a 62-y old and a 72-y old starting a reverse mortgage and how the available equity is so much more and a higher percentage. Talk a little bit about the math how that works where when you start with a reverse mortgage even you don't pull the money out you have access to more capital over time than if you wait until you need it or something like that. Yeah, that's an important issue and I've done a lot of simulations on the idea. So that just when do you start a reverse mortgage line of credit to let the line of credit start to grow and if the sooner you start the better is to your point like if you wait like if I'm 72 instead of 62 I'll get a bigger percentage of the home value and then also ideally over time if the market value home value is appreciating I'll get a bigger percentage of a higher home value by waiting. But for the most part that gets dwarfed by if I started at 62, it will grow in the meantime at a variable interest rate. And in the simulations I've done from historical data, it can be like 60 to 70% of the time. You'll get a larger line of credit by starting it earlier and letting it grow versus by waiting and then hopefully getting a bigger amount at that time. Plus, you do also have the flexibility if you start it young. And it is one of those less common situations where you could have gotten more credit by waiting. Well, then you just refinance at that point. So, you have the option to refinance. You're really not going to be worse off in terms of having the most possible borrowing capacity by starting it sooner rather than later.

5:05 I feel like it's my father in my ear always saying you can't start doing the right thing too soon, right? When's the best day to get your reverse mortgage when you qualify? What's the best day to save money? Today. What's the best way day to start a diet? Probably yesterday, if not today. When was the best day exercise? So, I think what you're saying is there's compounding effects. And the sooner you start on these good habits, the sooner you get the benefit of it of the compounding as well as the good habit or decision.

5:31 Absolutely. Yeah. So let's talk a bit about when you talk about this the simulations. The common number that u reverse mortgage originators use on house appreciation like one of the aspects of the loan is you take out a loan and then the interest unless you make payments which are optional gets added onto the loan balance and it goes up and then theoretically the home itself goes up in value over time so that your equity is still growing or staying the same. And yet the number that originators use, and I maybe it's an FHA guideline that allows them to, is a 4% annual appreciation rate on the house. Talk a little bit about the number that you use when you do simulations. Is that is that some sort of a because I just hear that number over and over again and I find that a little high? I'm a real estate broker. I'm all for real estate growing, but it seems a little high to me by historical standards. And I'm in California. So, let's talk a bit about that. The rate of appreciation nationally on average.

6:32 Uh-huh. Yeah. That well that's in line with the Case-Shiller home price index that's going back to 1890. It's a study that looks at like average appreciation of home values in the US.

6:45 And so actually just looking in my book right now because I didn't remember but yeah since 1890 the average home price appreciation from that Case-Shiller price index was 3.7%. If you look at a more recent period, it might be a little bit higher. So that's I think for the most part where that 4% number comes from.

7:03 So you think that's a fair number to use as a as an estimate? 4%. Well, I yeah, I think it's reasonable that because that's a nominal number that inflation's happening at the same time. And so when you subtract inflation from that

7:17 Means you're getting a small positive growth rate net of inflation, maybe in the one to one and a half percent range. Many things. Now, retirees, there's the issue that like for folks in retirement, their homes may not appreciate as quickly as a national average. Maybe they live in older neighborhoods or neighborhoods that are less focused on school districts and things. So, you might want a little haircut on that, but I don't think 4% is out of line as a just a basic assumption for home price growth.

7:45 Interesting. When you and I know you're very involved in investments, investment strategies. That's a big part of the equation is what you know what do you do with the money you have access to. Talk a little bit assumptions on the return numbers like what's a what's a reasonable number? Privacy today you can buy I think you know bonds at you know bonds 4% 5% riskier ones corporate bonds higher and of course stocks you can you know if you're lucky you get a Tesla or SpaceX and if you're not lucky you might be losing money. How do you how do you assess the assumptions of what somebody would do with the money that's available to them in their stocks investments and things like that? What kind of number do you use? What's the basis for that? Well, I like to start with where because so many expenses are linked to inflation. So in the US, we have the Treasury inflation protected securities or TIPS. They're treasury bonds that give you a real return plus whatever inflation ends up being. And right now, if you build a long-term TIPS ladder, you're getting in the ballpark of 2.2 to 2.3%. But again, plus inflation, that's the if inflation's 3%, that becomes 5.2 or 5.3% for instance. And that's really what I like to use as a starting point. Now, even as a conservative assumption, I wouldn't mind using that and saying that's the rate your portfolio will grow over time in retirement, but I understand that people do sometimes like to assume that stocks will outperform bonds and so they'll want to put a bigger number on that. Now you can't necessarily go high too high if you use a fixed rate of return but so much of financial planning these days uses the Monte Carlo simulations where they run a financial plan they report a probability of success and that's based on assuming average returns for the portfolio plus volatility and so the volatility will account for the risk that you don't get the average return so in that regard the number I said before the 2.2.3% real. Historically, the stock markets averaged about 6%

9:49 More than bonds. So, you could add that to the number to get your stock assumption, but then also with about a 20% annual volatility. And so, by plugging that into software that accounts for the volatility, if you're targeting a 90% chance that your plan will work, you'll still implicitly end up assuming something not too far out of line with those bond numbers I mentioned,

10:11 Right? And even if the 9% it doesn't hit and you're in the 10% range, it doesn't mean it necessary goes to zero, though that's a possibility, but it's more likely you're going to fall behind a bit. It's not it's not an all or nothing proposition, I think, is what is how you calculate it.

10:25 Oh, for the probability of success. Yeah. Strictly speaking, the assumptions are you spend your portfolio down to zero. Good. No, in real life, when people look to be getting in trouble that their portfolio's going in the wrong direction,

10:38 They'll probably make adjustments to their spending and that can help get them back on track. Yeah. If you can calculate the day of death and you can calculate the last day you need money, but if you can't calculate that day and you don't want to be right, like you don't want to be so committed to being right about that date that you tilt the odds in your favor, the opposite. We all want to live a long healthy life. So, let's not go there. One of the one of the terms I've heard you use in presentations is the sequence of returns risk. Describe a little bit what that concept means to a retiree.

11:09 And that's really just the idea that the math is different in retirement that if you just save money, it doesn't matter the order of the returns in terms of how much money you'll have at the end. Like if I'm saving money for the next 10 year 10 years, the markets could go up and then go back down or they could go down and then come back up. The order or the sequence of returns doesn't matter. I'd always have the same amount at the end of the 10 years. But if I'm spending from the portfolio, the order of returns matters. And what's really dangerous for retirements in terms of the sequence of returns, if you get a market downturn early in retirement, that can dig a hole for the portfolio. So that even if the overall market recovers and may do great later in retirement, but you may already be on a trajectory where you just can't enjoy that because your portfolio can't keep up. It continues to decline and you're just on a trajectory towards not being able to spend very much in retirement. We see that in the historical data where people have looked at like what's the worst case market returns for retirement spending and it tends to be retirements that started in the mid 1960s. You had high inflation, poor market returns in the late 60s going into the early 70s, 1973 and 1974 in particular. Then after the early 1980s, markets do really well.

12:30 But if you had retired in the mid 1960s, it was too late to enjoy the market recovery happening in that second half of a potential 30-year retirement horizon. Your portfolio was just in too much trouble by that point. So that's where the sequence of returns gets you because the average return over the 30 years starting in the mid1 1960s was pretty good. But you don't get to enjoy that full 30-year market average return. You really dependent on what happened in those early retirement years.

13:03 You know in mid 80s I lived in South Florida and there's a real chasm between the younger working force I was part of and the older retirees were there. And it the older retirees are so focused on saving money, early bird dinners and taking, you know, excess sugar packets at restaurants and being in the bank, taking free food and one I just asked somebody, I'm just curious why is it seems like the older people are so conscious on saving nickels and dimes here and there and he said, you understand that, you know, we I retired thinking I had a, you know, retirement plan that was going to, you know, manage a comfortable life and between inflation going up and the stock returns going down. I have a lot less than I planned on and costs go up. And so I'm not the only one who's trying to find some way to make the ends meet. So that's where, you know, some of those plans that sounded great in the 60s7s also didn't work out for everybody. And I think we all have to kind of take a look at our numbers and work hard to put a plan together that's going to work for us. One of the obvious aspects of a reverse mortgage is it's not free. Unlike a forward mortgage where there are refinance options, higher rate, but it will offset the closing cost in many cases. You can get a free refinance on reverse mortgages just for the most part you can't. They're you're going to pay some significant costs or an investment to get it. So, talk about how does that factor in when you do an analysis? How's that factor into whether or not the reverse mortgage is suitable or what the what the break even period is or how do you look at that as an analysis?

14:36 Uhuh. Yeah. So, I do when I like test different retirement strategies. That's really what I've built my career around is simulating different retirement strategies and the reverse mortgage has all these interesting features that really was captivating to write the programs for. But I assume the full retail costs of the reverse mortgage. So that if I make a statement that a reverse mortgage can improve your financial outcome, that's assuming the full retail pricing. When I had first gotten started in this space around 2015 and 2016, you could get $125 reverse mortgages, but there was a law change in 2017. And the big issue was there was a large increase in the initial mortgage insurance premium, 2% of the appraised home value up to an annual lending limit. And that for higher priced homes can already be getting you close to the $20,000 range. So there's origination costs, there's setup costs, and then there's that mortgage insurance premium. It can lead to sticker shock that it can be $20,000 plus for higher priced homes to set up the reverse mortgage. And I include that in my analysis. I have them finance that cost as part of the loan balance. And I need to make sure that the benefits of using the reverse mortgage in retirement can outweigh the costs of setting it up as well as when you borrow then also the interest that accumulates on the loan balance.

16:05 So if you do a reverse mortgage and the initial costs can be you know 3 4% just use a round number make it easy for math 3%. Then you have to really calculate an advantage that's going to you know pay that back over some period of time. What's a reasonable period of time for a payback versus an unreasonable? Obviously, if it takes you 30 years to pay back that 3%, you know, you've been negative all the time before that. If you pay it back, you know, like on a refinance, you know, day one or year one even, it makes a lot more sense. How do you, where do you find that break even period because people don't know when they're going to pass? You know, they might come to you at 62 and look healthy and you think they're going to live another 30, 40 years, and other people come to you in their 80s and they're going to surprise you. Or they could pass the next day. How do you what do your recommendations as far as analyzing the break even time period? What's a reasonable, you know, short version of that maybe?

16:59 So, I don't necessarily look specifically at the break even period. It's kind of the idea is if you're pretty sure you're going to move in the next few years. It's probably worth waiting until you're in the home that you anticipate staying in over the long term. Of course, things might change and you might need to move at some point, but if it's really once you're settling in a home and you think you're going to be there over the long-term horizon, that's when you can start thinking about the reverse mortgage because it can be hard to calculate a break even. It depends on how you're using the reverse mortgage. If you open the line of credit and let it grow as a contingency to have this access to all kinds of funds if things go wrong, well then really how rather than thinking about a break even, I think of those upfront costs more. It's an insurance premium.

17:45 You're paying for insurance to help protect you in retirement from any number of different potential calamities. If none of those calamities ever happen, you don't ever break even. It's just you paid in insurance. Like I pay for homeowners insurance. If my home doesn't burn down, there's no break even on the insurance premium. But, you know, if something happens and you're able to take advantage of those funds, then I switch to well, you're what you have left at the end of retirement is whatever you have left in your investment accounts plus the value of your home minus the loan balance due on the reverse mortgage. And I look at does that combined number increase when using a reverse mortgage strategically in retirement and often it does then and so that's where I get into arguing that the reverse mortgage can create advantages but it's not really specifically looking at any sort of break even on the upfront costs.

18:42 So that's interesting concept. So really, if you're looking at as an insurance policy and there's a number of issues, I mean, I can, you know, I've seen it used for tax strategies, right? Somebody had to get assets and if they sold, you know, stocks that gone up, they're going to pay taxes that they really didn't need to pay as a way to defer or avoid that. I've seen the opposite. Stock they sell stocks that went down, they're maybe going to miss on the on the back on the upside. They're not making an investment decision. They're just making a you know, liquidation of asset issue. And so I guess what you're really saying is this is an insurance that gives you different opportunities to avoid mistakes or to smooth things out if something comes up that's a problem. Interesting. Another topic that or another phrase that you use I've seen in your analysis is the buffer asset. Talk a little bit about the buffer asset, how that helps people retirement, gives them more flexibility. Like I just talked about as far as timing to buy stocks or not to buy stocks. How does the buffer asset concept help the homeowner? Yeah, that's where I first learned about reverse mortgages was this idea of it being used as a buffer asset. It's what most of the research out there about reverse mortgages has looked at. It's this idea that we talked about the sequence of returns risk. If I'm forced to sell from my portfolio at a loss, that can really dig a hole for the portfolio so that the portfolio never really recovers. The idea of the reverse mortgage is a buff buffer asset.

20:05 It's not correlated with the market. And what that really just means is your line of credit's always just growing. It never shrinks. So you have this growing line of credit and the buffer asset idea is you can temporarily cover your spending needs from the reverse mortgage line of credit so that you don't have to spend from your investment portfolio when your portfolio looks to be in trouble. And then that leaves your portfolio alone. It gives it more opportunity to recover and it creates these synergies. So we talked earlier like how I define did the retirement outcome improve. The generally speaking the idea is by strategically not having to always spend from your investments by using the reverse mortgage as a buffer asset. The ability to let your portfolio grow more than offsets the cost of the reverse mortgage. So that you can with the additional growth from the investments by not being forced to always spend from your investments. You can pay off the loan balance and still have something extra left over. And so you've gotten yourself a better retirement outcome in that way. And that's the reverse mortgage is a buffer asset. It temporarily covers your spending when your portfolio is in trouble and you'd rather not be selling shares because you're in a market downturn and you're really going to dig a hole in your portfolio if you just keep selling from it.

21:25 I imagine also just time shifting, right? Can you can sell in January rather than December if you can borrow from your line of credit temporarily and now you're moving this tax liability like my you know maybe like my case had a really good year this year I'd love not to have to sell anything until January and so that's way I don't want taxes more taxes on this year's income I'd rather push it on to next year if I can so different sequences selling property and closing dates I guess gives you some flexibility in how to manage some of these things

21:53 Yeah and so that's my main area of interest these days is tax planning for retirement. And there's all these issues in the tax code where that are linked to your adjusted gross income before you take any below the line deductions. So below the line deductions can't save you, but how much of your social security will be taxed? Do you have to pay surcharges on Medicare premiums? Will that new age 65 plus deduction that was introduced in July, will that phase out on you? There's a bunch of different things where if I need more spending power, well, if I have to draw from my IRA, that's fully taxable income. If I have to sell shares from my taxable account, I'm creating long-term capital gains that can trigger tax problems. And the reverse mortgage is a pool of funds that allow it's just like a Roth IRA in the sense that I can take I can spend from the reverse mortgage and it's not taxable income. It does not enter my adjusted gross income. So it allows me to spend without creating potential tax headaches that I'd rather not have to deal with. So that's another use of reverse mortgages. And this is where I think the reverse mortgage has gone from, you know, originally I think it was a loan of last resort. You know, people had a house, no other assets, couldn't qualify, could fog a mirror, you could get a loan and draw some money on to supplement, you know, maybe social security. And then there was using it for purchase, which is nice as well. But really what you're talking about is this becomes really like a multi-purpose tool like a Swiss Army knife in a very complicated retirement program where somebody who has substantial assets and substantial equity house can use this tool to round some corners off and smooth over some of the edges in the retirement plan and help them through the process. It's just to me it's just amazing tool I keep learning more and more about. I know one of the things I saw you mention once was how diverse mortgage can also help protect social security or increase social security benefits. Talk about how for somebody who maybe, you know, social security benefits aren't determinative for them.

23:54 If they can hold them off, hold off accessing for a while, reverse mortgage is a tool to help them get more from their benefits. Yeah, that's another thing I've looked at. And so I'm a big advocate that at least the person for a couple, the person with the higher primary insurance amount, so the higher social security benefit, the higher income worker in the household, that they consider delaying social security till closer to age 70. But if they're already retired, you don't necessarily want to just be selling from your investments while you're delaying social security because that creates more sequence of returns risk. So, one option you have, you cover that missing social security benefit since you're delaying what you're missing out from social security in the short run. That's going to be more than compensated to you in the long run. But cover those missing social security benefits through the reverse mortgage. And then you don't have to worry about selling more from the portfolio to meet expenses while you're getting the additional benefits from the you have a 77% higher inflationadjusted lifetime social security benefit. By waiting until age 70 compared to age 62.

25:02 So the now in my mind just curious your thinking on this one. I couldn't qualify at 62 because I'm still I was still working and made too much income. I was too rich to get my 62 year old. And I'm now 66 and 11 months. I'm not I'm actually eligible for what used to be 65 versus 70 was a choice I had to make. My thinking was I rather just take the money and put in the bank in case the thing goes bankrupt between now and then. What are your thoughts on social security? I mean, I know that mathematically somebody's going to live a longer life is going to be better off delaying. Obviously, somebody has a shorter life, you know, it probably doesn't make much difference or they might as well get the money now. How do you how do you evaluate that choice for people? Yeah, I'm all for using conservative assumptions for retirement planning, but I know a lot of people like using the idea that social security is going to disappear, and I think that's way too conservative. Currently, we're projected the trust fund will deplete in 2034, and at that point, incoming payroll taxes and taxes on benefits should cover 81% of presently legislated benefits. So, in my own planning, I assume like a 25% haircut on my legislated benefit, but I'm also a lot further away from eligibility age at this point than people near retirement today. If folks want to assume their benefit could be say 10 to 20% less or 25% less, I've got no problem with that. But I really think it reform is needed, but just like in the past, there's going to be some combination of maybe small benefit increases, but maybe also further increasing the retirement age for young people, not for people near retirement. And also payroll tax increases. There's going to be a combination to get Social Security back on track. And I think people don't have to worry that Social Security is simply gonna disappear.

26:56 Okay. Well, what a confidence for Social Security. I'm I think you're right. I think she's more emotional that I worked so hard put all these years away to get anything from the government. It was just a thrill. My wife was older and unfortunately had some medical issues and so we waited but for me I it just worked out that it was kind of fun to get something and know that before they went broke I got something out of the out of the money I paid in over all those years. One of the one of the experiences I have now I'm not a wealth manager. I don't get into that space at all. I do refer people to different, you know, the portfolio of people who can help you in those areas, bankers and investment advisors and such.

27:37 But I often will say to a customer be considered reverse mortgage. And the more professional they are, the more push back I get on why would you even think about a reverse mortgage? And I know my business more marketing, I know it's because the first version of the of the reverse mortgage was terrible. I also think the industry does a shoot itself in the foot with very poor servicing issues. Not really for your you know discussion but you know I'm sure you must and you're offering very sophisticated detailed mathematically sophisticated analyses you must get that same push back at sometimes maybe it's more respectful than I get. Do you get that push back when you talk to investment advisors and how do you answer that question or answer that issue

28:23 On specifically the reverse mortgage that Yeah. Why are you doing reverse mortgage? I'm not broke. I don't need to qualify for a loan. Why would you put that in there?

28:31 Yeah. There's so many misconceptions. It's just an ongoing thing that a lot of advisors still think you lose the title to the home as part of the reverse mortgage, which was never the case. But yeah, still viewed as a last resort option. So yeah, I think a lot of advisors start from the position that my clients aren't going to run out of money. I don't need this. I don't even need to know about it. I'm going to manage their retirements fine. And yeah, that's unfortunate just because I've always looked at reverse mortgages as a tool that if you strategically can enhance your retirement efficiency. It's not a last resort. It's strategically like the buffer asset idea. Strategically manage your home value alongside your investment portfolio to get the most out of your retirement assets. And I find that the last resort idea, the idea that just use your investments until they run out and then switch to a reverse mortgage is the worst way to do it. It's better to get that line of credit opened and growing and using it strategically throughout retirement. So, I think we're seeing changing perceptions about that. But yeah, a lot of advisors who just don't take the time to learn about how retirement is different from pre-retirement. They're really just embedded in that pre-retirement accumulation mindset. Yeah. They their ears are closed to reverse mortgages.

29:53 So, I mean, do you get that push back as from time to time or, you know, I mean, again, I can see why I would get I'm just a real estate agent and for most people, what the heck do I know? Though I feel like I do know a lot about this topic. I have a podcast on the subject for crying out loud. Do you get that push back too? I mean the second level I mean the first push back is well I thought that's a loan of glass resort and then you give an explanation. Do you still find I find an so and they know nothing about the product like they demonstrate that when they say you give up title of the house they're really saying I'm incompetent to discuss reverse mortgages by definition right you're you've disqualified yourself as knowing anything if you know that wrong. Do you get like that second level push back still or once you give them an answer you're weighed foul and they go you must know what you're talking about and move forward.

30:38 I might get the push back less because generally the only time I'm talking about reverse mortgages I might have already done a presentation and then I'm talking to people after the presentation so they already heard the pitch and maybe have to change how they express things. But even I was doing a lot of presentations on reverse mortgages. Probably in the peak was more like 2016 2017. It's just been gradually since then, less and less each year. So these days I'm not even sure where a lot of advisors are with reverse mortgages. I think I presented on the topic once this year, 2025. It's just not happening as much these days for me.

31:20 I don't think I don't think there's been that much movement of the investment advisor industry. I think they're so focused on stocks, bonds, commissions, compliance. I just don't it just it fascinates me. Because like I said, this is such a variable tool, such a powerful tool, not appropriate for everybody. Though, you know, minimal expense for insurance to give you so many different options, but okay. So, if I gave you magic wand, you've done some presentations. I know you've been consulted on from the different people proposing regulations, proposing changes. You've done detailed analysis on these programs. If you had a magic wand that could change one feature of the product, particularly the heck product, which is a government shured program, the most common one, I think about 90%. To make it more efficient for retirees, what change would you make? Does any come to mind that you'd like to see changed?

32:13 Yeah, I'd probably have to relate to that initial mortgage insurance premium. And I understand why it's there, but it almost it creates this sticker shock that people who might get intrigued by reverse mortgages then see it's going to cost 20 plus thousand dollars to set up even if it can create benefits for them that they just can't go any further. It's like that's a dead end. So, that's in those old days when you could get the $125 reverse mortgage, it seemed like that was really helping generate momentum that completely was lost after the law change,

32:49 Right? So, if we could find a way to structure those insurance premiums, I know they're needed, but structuring them more as a ongoing percentage of the loan balance instead of an initial amount, that might help a lot to get people looking at it. Again,

33:03 We're like the forward mortgages where there's an upfront and then there's a monthly. Maybe breaking into two pieces will help reduce the sticker shock a bit and then, you know, transfer over time when they're getting some of the benefits of having it. That's the other thing. I think you pay the whole thing day one, you don't have any benefit of the product other than it's an insurance policy. It's nice to have peace of mind, but when you're drawing on the money or and the line's building, you're getting the benefit of the product. If you can push some of the cost out to when you're experiencing the benefits, it seems that could be that's an interesting concept. Okay. So, look, I've gone over time. I apologize. I just fascinated you. You're such a depth of knowledge. For anybody who's interested in learning more about the wealth the opportunities of wealth management and planning with reverse mortgage wadefoul.com is the website where you can get his information and contact information and overall everything that he's doing. And then Amazon, he's an accomplished author. And one of the most popular books that I have had, I don't know, 20 30 different originators recommend to me, which I have right here is the Retirement Planning Guidebook. But I understand now we're recording this here in December, but we're probably not issuing this episode till January. And I understand there's a rework of the Retirement Planning Guidebook coming out.

34:21 Yeah, I would just hold off until late January. The there'll be a third edition of the Retirement Planning Guidebook. It won't say updated for 2025 anymore and I'm really working hard to make a lot of improvements to it. So just late January. Can't say the date because it's pretty much in real time. I have to wait till the inflation number is released which is usually around January 10th and then I can finish up the last few charts and get the new edition out there. So by late January there'll be the third edition of the Retirement Planning Guidebook. Can you give us one juicy piece that you're going to update or one plan you have for the update version?

34:55 Well, I've got everything in there for the tax legislation from July 2025. It's called the one big beautiful bill. At first, I thought that was going to simplify taxes because it was as it was before that. Next year in 2020, well, now it's 20 in 2026, we're going to have different tax rates, but the old tax rates were permanently extended. And so that let me cut out a few pages of my book. But then it added so many new complications about phase all these new below the line deductions that are separate from the standard deduction and that phase out with income. It actually added more complication and made the chapter longer. So the tax planning chapter it's fully revised and updated for the new one big beautiful bill act tax changes.

35:40 Well, we're going to look forward to one big beautiful book update. The Retirement Planning Guidebook available on Amazon and where you buy your books. You can get more information wadefoul.com is the website. Dr. Pfau, thank you so much again for your time and I think more importantly for your support for this industry. I'm not an originator. I do this because I really believe we as a country are leaving equity on the table. I really want to encourage people to learn the product to use it properly. I want professionals to raise their standards so they can present it more effectively and we can do more to help people with affordability and retirement years and purchasing the property they want to live And so, but you make such a big contribution. Thank you so much for your help in this industry. I really appreciate it.

36:16 Absolutely. Thank you. And first, this was a Reverse Mortgage Podcast. We do this every week. Interview usually mortgage originators that do this product or management or vendors. In this case, a key person to help us explain and learn about the product. If you're an originator, definitely get his books to learn how the pro program works, the details, the numbers behind it. And really to offer some authority to anybody you work with on a referral basis. I'm Bill Gross at Bill Gross Probate. If I can help in any way, please reach out, like, subscribe. If you want to be interviewed on this podcast, send me a note as well. As always, make today your best day ever.