The American Dream is to own a home free and clear... or is it? Traditional financial advice tells us to pay off our mortgage. However, with no mortgage payment and nearing retirement, many baby boomers and retirees find themselves "house rich, cash poor." According to an analysis by the Brookings Institution, based on 2001 savings data, even among the richest members of the 55-to-59 age group (households in the top 10 percent of incomes), the median account balance in 401(k) plans was only $299,000. The median holding for all households with retirement accounts in that age group was $50,000. What conclusion can be drawn from these numbers?

With health care costs rising and Social Security and Pensions insufficient to maintain their standard of living, retirees are left with few options: 1) Go back to work, 2) Sell their home and relocate leaving memories and family behind, or 3) Utilize a reverse mortgage, relying on the equity they have exhaustively spent the last 30 years paying off to now fund their retirement on the banks terms. Let's explore the mortgage in more detail and you'll be amazed at what you discover.

Homes Were Meant To Store Families, Not Cash

"More seniors are recognizing that traditional retirements tools, such as IRAs, pensions and 401(k)s are not providing sufficient income to help fund everyday living expenses and healthcare," said Peter Bell, President of NRMLA. Fueled by rising home values, larger sales forces and increased consumer acceptance, the number of federally insured reverse mortgages made in the U.S. in 2006 grew 77 percent, according to the National Reverse Mortgage Lenders Association. "Through proper education, more retirees are recognizing that the home they have lived in for so many years can now take care of them...to access the equity accumulated over 20, 30, 40 years, to help them living more comfortably." Here's the catch- it may not always be there.

Home Equity Is Not Guaranteed

As a homeowner, would you agree we've experienced enormous equity appreciation over the past 4-5 years? In fact, some areas of the country have appreciated by as much as 25-30% per year. With no shortage of press lately on the fear of a housing correction in our midst, that equity appreciation is not safe and accessible to you during a market correction, natural disaster or loss of employment. In fact, most people, especially retirees, unexpectantly need cash when they are sick, unemployed or have insufficient income. Obtaining a home loan, under these circumstances can be either impossible or very expensive. Knowing this many that will need to rely on that home equity would agree then that it is better to have access to that equity and not need it, than need it and not have access to it.

Redirected Mortgage Payments Become Retirement Plan Contribution

With a growing urgency to save more, traditional retirement accounts such as IRAs and 401(k)s have limitations and restrictions when allowing you to contribute to, grow and transfer your retirement nest egg. What is the difference in tax benefit between paying $15,000 in mortgage interest and $15,000 to your 401(k)? Nothing. They just show up on different places on your Tax Return. However, with idle equity trapped in the home, paying $15,000 in mortgage interest a year has allowed you to leverage $250,000 in home equity at 6% interest, versus contributing $15,000 a year over 16 years in qualified plan contributions.

By leveraging home equity, every mortgage payment a homeowner makes is indirectly funding their retirement account. With the National Savings Rate dwindling and a surplus of Home Equity that is not liquid or safe trapped in the home, you can catch up on 20 years of savings by leveraging that equity prudently into vehicles with principle protection. Let's look at one up close.

Investment Grade Life Insurance (Life Insurance As You've Never Seen It Before)

There are vehicles available to us where we can reposition $250,000 of tax-free funds that remain accessible when you need it without penalty (Liquidity), are principally protected in a bear market (Safety), and can earn a 30 year average of 9.38% that allows you to create a prudent arbitrage (Rate of Return). Additionally, this private retirement vehicle allows Tax-Advantaged Contributions, Tax-Free Accumulation, Tax-Free Withdrawal and Tax-Free Transfer that would grow to an amount that could pay off your mortgage many times over, maximize your tax deductions, and fund your retirement without fear of outliving your income, while offering you all the emotional benefits of having a home paid off.

The most unique feature of permanent life insurance is that under Section 72(e) and 7702 of the Internal Revenue Code the accumulation of cash inside the insurance contract is tax advantaged. Not only can the cash value accumulate tax free, but the cash can also be accessed tax free. It is a unique vehicle that allows tax free account value accumulation, allows you to access your money tax free, and, when you die, blossoms in value and transfers income tax free. There is no other vehicle that can do this.

Ogan Financial Group, Inc. is the premier Ventura County-based financial services firm that specializes in assisting individuals, families, businesses, and institutions in the optimization and protection of their assets. Their mission is to teach and implement the systems and strategies that deliver perpetual financial and family empowerment.

To learn more about employing these Strategic Equity strategies for Wealth Optimization as illustrated in the Missed Fortune book series by Douglas Andrew, please register for one of our free upcoming educational seminars by visiting our website at www.OganFinancialGroup.com.