It takes planning to meet retirement goals, and sometimes “the best laid plans of mice and men often go awry.”
So, it’s really not surprising to learn that some baby boomers will continue working past the magical age of 65 because they are not financially prepared to retire, while others want to stay in the workforce in some capacity to ward of boredom and maintain a sense of purpose.
For those who intend to retire from their current full-time career, the focus will be on family, favorite activities and hobbies.
While the ways they view retirement may vary greatly, baby boomers can all agree on one thing, financial preparedness is the gateway to retirement freedom – and over time, owning a home can prove to be a wise part of this process.
Before you even add home equity into the equation, consider the fact that homeowners with fixed-rate mortgages never have to worry about rent increases. The expenses associated with living in their home are fairly consistent when it comes to estimating a future housing budget. Then, there will come a time when they can permanently remove the amount of their monthly mortgage payment from the budget, leaving more money to enjoy retirement.
Equity, of course, is the main ingredient when it comes to making a move, and as baby boomers approach retirement, they will be making certain decisions about their housing requirements. Just as they have had a major impact on the housing market during the different stages earlier in life, they are poised to once again have a profound effect on supply and demand.
While there have been concerns over the last few years as to whether homeownership remains a part of the American Dream, a recent study by the Joint Center for Housing Studies at Harvard University addressed this issue. Their paper, Re-examining the Social Benefits of Homeownership after the Housing Crisis, revealed some interesting findings:
Homeownership Still Preferred Over Renting
“Even after the dramatic loss of equity and the high foreclosure rates, the early evidence suggests that people seem to believe that, over the long run, owning is still preferable to renting. The long term cultural preference for owning seems to have weathered the recent housing crisis.”
Americans Still Expect to be Homeowners
“The research on home-buying expectations supports the conclusion that very large percentages of Americans still expect to buy a home at some time in the future.”
Younger Americans Desire Homeownership
“The finding that younger renters and owners are more likely than their older counterparts to expect to own bodes well for the future of the housing market.”
Even after a very difficult decade, the belief that homeownership is a part of the American Dream still lives on. In fact, the current housing market recovery proves that many people realize what a great time it is to buy a home.
That makes it a great a time to sell as well.
With over 36 million “early boomers” (aged 55 to 64) and 45 million “later boomers” (aged 45-54) poised for retirement in the next two decades (based on numbers from the 2010 US Census), there’s bound to be an influx of supply as they make their next move.
Typically empty nesters, baby boomers are likely to downsize, but in familiar surroundings, largely in the suburbs where they settled decades ago, according to Sandra Rosenbloom of the Urban Institute, who studies retirement trends. In fact, the desire to relocate drops significantly as people get older. Roughly one out of three people in their 20s move in any given year, but as people age into their 50s and beyond, the ratio drops to one in 20.
Some of the reasons why baby boomers will choose to relocate include being near children and grandchildren, discovering an area with a lower cost of living, choosing an area that’s less congested and leaving cold weather behind. However, since most boomers are ready to pursue their own interests in a community they know and love, they will often consider maintenance-free options where they no longer need to cut the grass or shovel snow in planned communities that may or may not feature recreational activities and social clubs. Over time, some will even choose to forgo housecleaning and meal preparation, moving to an independent living facility with planned social activities.
“Homeownership is an investment in your future and is how many younger American families begin to accumulate wealth,” National Association of Realtors Vice President of Research Paul Bishop said.
“The oldest of the millennial generation are now entering the years in which people typically buy a first home, and despite the recent downturn, homeownership still matters to them.
"The sheer size of the millennial generation, the largest in history after the Baby Boomers, is expected to give a powerful boost to long-run housing demand.”