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Leveraging Your Wealth in Retirement

On today's episode of the Wiser Roundtable Podcast, the team talks about leveraging your wealth in retirement and the method of Securities Based Lending.

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Using Your Wealth in Retirement 

The team discusses the method of Securities Based Lending. This stratgey is tapping into our wealth’s collateral to borrow money to fund major purchases (or events) that we want to fund in our retirement, by using the assets we have in our portfolios.

 “The Bank of Me”

Securities Based Lending is using your own securities as collateral. Based on the values of your assets you can pledge those at certain banks and use them as backing for your loan. Banks evaluate your earned income while evaluating your ability to loan. In retirement, you do not have as much earned income as you did when you were working. Utilizing the assets in your portfolio (stocks, bonds, etc.), you can borrow money to fund purchases and then spread payment out further.

Method of Paying Interest on a Loan Purchase 

We did the math and found that the opportunity cost of allowing the money to sit in your brokerage account is higher than paying it all outright. This can also be used in a tax planning aspect. Utilizing those assets to borrow money allows you to fund the purchase today without incurring any taxes that go along with selling those assets. In this case, you are just pushing off the purchase and incurring less tax.

Planning for Extravagant Purchases

Another way you can use this method is for planning an extravagant purchase. For an extravagant family trip, rather than paying upfront with cash, you can utilize this securities-based lending method. You can pay it off over time or use dividends to match the cash flow. This method could be used for collectable cars, yachts, planes, or really any extravagant purchase you’d like to make in retirement. The whole point is to delay the opportunity cost up front and what the money could grow to by paying for these assets over time with monthly payments.

What Are the Risks?

Any time you are dealing with an asset that fluctuates in market value, you might find yourself upside down in terms of collateral. Most firms aren’t going to give you 100% loan based on your assets. Usually, most firms wont allow you to take more than 50% on average. Should your account value drop below the loan value, they could ask you to pledge other assets as collateral such as cash assets or traditional collateral. Nonetheless, this could happen.

Why Would a Brokerage Firm Advocate for a Securities-Based Lending?

Some see it as double-dipping because a lot of lending institutions are connected to banks. They might be connected to the bank that is holding your 2 million dollars and is now also getting a loan out of you. The other thing is that wealth is not made in trading. The Warren Buffet approach (buying as if you will hold it forever) creates very high capital gains. Because of this, it creates another revenue stream for brokerage firms.


1:12 Using Our Wealth in Retirement

1:39 “The Bank of Me”

3:02 Method of Paying Interest on a Loan Purchase

5:57 Planning for Extravagant Purchases

8:51 What Are the Risks?

10:29 Why Would a Brokerage Firm Advocate for a Securities-Based Lending?


Learn more about Casey Smith and connect with him on Twitter.

Learn more about Brad Lyons.

Learn more about Matthews Barnett.


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Learn more about the Wiser Wealth Management Roundtable podcast and access previous episodes.

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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