 Jacob and Moira Steinman, 87 and 79, lived in a beautiful Pacific Heights home they originally bought for $34,000, and had recently been appraised at $4.5 million. Jacob laughs, remembering how nervous they were when they first bought the home. They have two sons, both of whom are attorneys, and a current mortgage of $200,000.
Until the bear market, the Steinmans lived comfortably on the income from their investments. However, when the market dropped, their investment portfolio was insufficient to support them. They were faced with the possibility of having to liquidate their investments, pay capital gains tax on the income, and reduce their future income while the cost of living kept rising. In addition, they wanted to set some money aside for medical expenses that might arise. They were unable to qualify for long-term care insurance. Using a reverse mortgage they were able to borrow $1.9 million. They used the funds to pay off their existing mortgage, set aside funds for medical expenses, and assure themselves of a comfortable, secure retirement.
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