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Why baby boomers are house poor.

There are more than 72 million baby boomers in the United States. Many of these boomers find themselves in a challenging financial position — they are “house poor.”

House poor means they spend so much on their home that they struggle to afford other essentials, such as daily expenses, healthcare, and leisure activities. The general rule of thumb is that housing costs shouldn’t exceed 30% of one’s income. However, for those who are house poor, these costs are often much higher.

So, why are baby boomers specifically becoming house poor? A recent article on GoBankingRates.com explains some of the key reasons.

1. Resisting Downsizing

Many baby boomers have seen their homes appreciate significantly over the years and have developed a strong emotional attachment to them. In my experience, that along with the daunting task of cleaning out to downsize prevents many from making a move when it might be the best option.

2. Refinancing Instead of Paying Off the Mortgage

Another trend affecting baby boomers is their choice to refinance rather than pay off their mortgages. While refinancing can offer short-term financial relief or extra cash, it often leads to more debt over time and fewer resources to help one enjoy late life.

3. Reluctance to Rent Out Part of Their Home

Renting out a portion of a home can be an excellent way to offset costs. However, many baby boomers are reluctant to consider this option. For those struggling with home-related expenses, it can help make the home more affordable.

4. Dipping Into Savings to Keep the House

Many baby boomers dip into their savings to cover home-related expenses, which can be risky. I advise clients to consult with their financial advisor to determine whether the home is “affordable.” Seniors can also explore a reverse mortgage.

Finding a Solution: Assessing Your Options

To avoid becoming house poor, assess your financial situation and consider all available options. Ultimately, it’s about making sure the home works for retirement—not the other way around.

Consulting with a financial advisor can provide valuable guidance tailored to individual circumstances, ensuring a stable and enjoyable retirement. And, if you’re considering a move, contact us to help you get started.

>>Click here to read the GoBankingRates.com article in its entirety.

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Many will be feel relief from Medicare changes

Will the Inflation Reduction Act help you?

AARP is explaining how the Inflation Reduction Act will help seniors — especially those dependent on insulin. The Act is aimed at addressing inflation by reducing the deficit, investing in domestic energy production, and lowering drug prices.

(Article from AARP) For the first time in Medicare’s history, the amount of money that beneficiaries in drug plans will have to pay for their prescriptions each year will be capped, thanks to provisions of the Inflation Reduction Act of 2022. The new law makes other changes to the program’s Part D drug benefits, including putting a limit on out-of-pocket payments for insulin and making vital vaccines free. 

“There was previously no limit on how much a person on Part D could have to pay in a given year,” says Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer. “And 1.3 million enrollees spent more than $2,000 in 2020.”  

As with many of the other provisions in the new law, the changes to Part D out-of-pocket spending will roll out over the next several years. Here’s a look at how the new cost-sharing rules will work and when the savings will start. 

>>Read the rest — click here to go to AARP.com

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New Trends in Retirement Living

What are the latest trends in retirement living? There’s a definite move toward accommodating retirees focusing on health, wellness and nature. Here’s a great article from Next Avenue about the latest trends.

In 2008, Janice Barton was vacationing at Serenbe, a biophilic, or nature-centered, community in the Chattahoochee Hills about 30 miles outside of Atlanta. She fell in love with the village’s English-style cottages, outdoor artist studio, nature trails, local shops and café all within walking distance, and decided to buy her forever home there.

“In a typical suburb, you drive into your garage, shut the door and that is it,” explained Barton, who at 73 is a solo ager. “Maybe you know your neighbors on either side or across the street but you don’t have anything in common so you don’t want to invest the time and energy. At Serenbe, I feel younger because I am engaged and I’m living a more vibrant life.”

Serenbe and other new amenities-laden retirement communities illustrate how the senior living industry is going through a transformation that has accelerated since the COVID-19 pandemic. Pre-pandemic Americans age 65+ expressed the desire to stay living in their homes as long as possible; the social isolation imposed by the pandemic has solo agers — the 12% of the population who, according to AARP, are widowed, divorced or without adult children to care for them — rethinking the desire to age alone at home.

>>Read the full article from Next Avenue.

***What is Next Avenue? A very cool concept – click here to learn more about this resource for older Americans.

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US News & World Report — Best Senior Living Communities

Known for its “Best” lists, US News & World Report is now out with its Best Senior Living list. You’re now able to search for what they’ve determined to be the “best” near you.

(From US News & World Report) For many older adults, there may come a time when living in their current home is no longer desirable or possible. Making a choice about what the right next steps are can depend a lot on their health and their preferences.

Someone who no longer wants the upkeep of a larger home and yardwork might choose an independent living or continuing care retirement community. If basic daily tasks are becoming a struggle or if they’re recovering from a hospitalization, an assisted living setting where there is some help available, either temporarily or longer term, is a good choice. Families concerned for a loved one with memory loss can consider a memory care community with staff to help with both daily activities and safety.

To help seniors and their families make these decisions, residents and families from over 3,000 independent, assisted and memory care communities were surveyed. They were asked to rate their experience with the things that matter most – the kindness of staff; variety of activities; quality of the food and dining experience; whether local transportation is provided to doctor’s appointments, grocery stores or other daily needs; the quality of on-site caregiving and more. The top-rated communities for each level of care have been rated Best Senior Living in their categories.

>>Read the full article and search for communities near you.

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How a move manager can help you downsize

A recent Washington Post article looks at “how a move manager can help you trim down on your belongings.”  There are several of these companies in the Atlanta area including franchises Caring Transitions and Smooth Moves. They are extremely helpful for homeowners or their adult children who need to clean out, liquidate items or pack in advance of a move or to simply ensure the space is clutter-free, clear and safe.

Like a senior real estate specialist (SRES), these organizations specialize in helping older adults downsize and relocate. Check out this article from the Washington Post and here are links to a couple of the senior move managers in Atlanta.

They will provide you with a quote for the services you need.

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Why do seniors choose to relocate?

It used to be that a family stayed in a home for 50+ years moving out only when necessary, but times have certainly changed. Couples and individuals are healthier longer and when they decide to move, it’s not necessarily a move to live with a child or into a senior living facility. 

The National Association of Realtors’ 2021 Generational Trends Report shows the changing priorities of today’s seniors.

  • 1/4 or more of seniors surveyed cite the desire to live closer to family and friends as their primary reason for relocating.  The second most cited reason is that they consider their existing home too large.
  • More than 1/2 of seniors surveyed say their top consideration when looking for a neighborhood is the quality of the neighborhood. Coming in second is its proximity to friends and family and third is its convenience to shopping and health facilities.
  • When asked about factors causing a buyer to move, 1/4 of 66-74 year olds and 1/3 or 75-95 year olds say a household members health is the primary reason.
  • Among those considering senior-related housing, today’s seniors are looking for detached single family houses located in a suburb.

Understanding what seniors want and need in their next homes is what Senior Real Estate Specialists do best. They specialize in knowing what homes and communities work best for seniors who want accessibility, convenience and security in their future neighborhood.

The survey also revealed that seniors contact agents as a first step in the home search process, take the longest (an average of 10 weeks) to search, and ultimately view fewer homes than younger home buyers. Seniors want a realtor with the expertise to make the homebuying process as stress-free as possible.  Atlanta Seniors Real Estate is one of the best at understanding how best to serve senior homebuyers. Contact us for a complimentary consultation to learn how we can help you with your next real estate transaction.

Click here to contact Hilary Walker
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8 Money Tips for Seniors Suffering from Inflation

Kiplinger is out with what they call eight financial survival tips. It’s a great read with some terrific suggestions of things to keep in mind as we deal with inflation and a recession.

(From Kiplinger) Why is this year different from all other years for seniors? Inflation. The latest numbers show a whopping inflation rate that’s the highest since 1982.  This means that everything you buy will be more expensive.  You see this impact at the gas pump, the grocery store, the doctor and, frankly, all over. The issue is that you don’t have a choice not to buy certain things.

It’s interesting, because, we sort of have a love-hate relationship with our financial world.  We love that the economy is back roaring at a full-employment rate and that almost anyone can get a job if they want one.  We also love that wages are going up and that we are back in the car and eating out and traveling. But at the same time, we hate that this growth breeds inflation, resulting in costs for everything rising.  We also may support the Ukrainians in their war with Russia, but we hate the costs to us.

>>Read the full article from Kiplinger

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What you need to know about long term care.

It’s not something we like to think about, but most Americans will face a time when they need assistance to care for themselves.  Whether you’re thinking of yourself or a loved one, we all must be well versed in long term care and other elder care programs in order to be prepared. 

AARP’s CEO Jo Ann Jenkins has written an article calling attention to what she refers to as a deeply flawed long term care system.  She explains what long term care is and what is at risk today. Take a few minutes and learn more about the system you may one day depend on.

>>Long Term Care: The Crisis Everyone Must Face

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Voting in Georgia’s 2022 Primaries

Georgia’s primary elections are coming up, but you can go ahead and vote.  Georgia’s May 24th primaries will determine which candidates appear on November’s general election ballot for the U.S. Senate and House of Representatives, State Senate and House, governor, lieutenant governor and other state executive offices, as well as several state high courts.

AARP has all of the information you need to prepare for voting. Click below for their Voting Guide including links to getting your absentee ballot or what you need to know about early voting.

>>Read more in their 2022 Voting Guide.

 

 

 

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The real estate boom and the baby boomer

If you’re a baby-boomer or senior and you aren’t sure what to do about downsizing, you’re certainly not alone.  In a recent Atlanta Seniors Real Estate survey, we found:

  • 67% of respondents are planning to move
  • 40% of respondents say they will be downsizing
  • 40% say they’re looking for an owner’s suite on the main level or a ranch style home

With inventory low, you know you can easily sell your home, but what then? Where do you go? Will  you be able to find a home that meets your needs? And, with interest rates on the rise, you’ll likely be paying more than you expected just a few months ago.

So, is this a hopeless situation for seniors hoping to sell and move into something smaller?

Absolutely not.

One positive for seniors is that they have seen much higher interest rates in their lifetime, so the fluctuations aren’t as much of a shock to them as it is to younger buyers. And the plusses don’t stop there.

Atlanta Seniors Real Estate owner and Senior Real Estate Specialist (SRES) Hilary Walker, says her clients are in a strong situation if they can just find a home they like and are comfortable moving into. She explains, “In the case of these kinds of buyers, interest rates don’t bother them too much since, in most cases, they plan to use the equity they have in their current home to purchase the next home or they only plan to keep the mortgage for a few years before they pay it off and live mortgage free. In a couple of cases, they are choosing to use a Reverse Mortgage to help stretch their wealth, therefore, the interest rate is not an issue since they can choose not to make any mortgage payments on a monthly basis.”

True that higher interest rates will not necessarily mean more houses on the market, but it may mean 10 offers instead of 20. So, don’t hesitate to begin the process and sign on to work with an SRES agent who is familiar with all of the issues associated with baby-boomers selling and buying real estate.

Contact Hilary Walker today for a complimentary consultation.

>>You can still participate in the Atlanta Seniors Real Estate survey and qualify for a $25 Visa Gift Card. Click here to take part in the brief survey.

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What will rising interest rates mean for senior home sellers and buyers?

What my clients are saying

My mature and experienced clients know that rates have been much higher than they are today (just 20 years ago they may have purchased a house with a 7% rate). So, today’s rate at just over 5% is still a good rate in their minds, although we’ve been spoiled with those extremely low 3% rates in recent years.

These clients are savvy and experienced to know also that increasing rates can be a detraction for buyers who want to buy now or very soon. So, now the baby boomers and older homeowners in my circle are calling to ask the very serious question…”How quickly do you think my home will sell if we put it on the market now and where do I go if I sell now?“

Here are two scenarios that I’ve seen first-hand.

First Scenario

A first-time home buyer (over 65) approved for a loan in late March prefers purchasing rather than renting because rent has increased by a significant amount for the last 3-years. We have been on the lookout for a home but have not yet found anything suitable.

Reasons for a delayed purchase in this case are:

  • wanting a home with all spaces on one level
  • low inventory in the area of choice with only one or two potential homes coming on the market each week
  • multiple offers on those few homes or they are in disrepair
  • and the buyer is searching with a lower-than-average price point (average house values for our local area rose from $278k to $338k)

    The first week of May, the lender informed us that the interest rates went up over a quarter percent since the buyer was approved in March so there will be an increase in mortgage payments. This makes the buyer nervous because they are on a fixed income. An interest rate hike above 5.5% may force this buyer out of the homeownership market so time is of the essence.

    Second Scenario

    Most of my clients are already retired, on a fixed income, or have a budget they are adamant to stick to, so overspending for another home is hard to do. I say “overspending” because that is the word of choice among some of my clients who have watched the market take an unprecedented boom of house prices and, while that is fantastic for the seller, it is a hard pill to swallow for the mature buyer.

However, those who need to move are acknowledging this is the market they are in and must move forward regardless. I have a few clients who are in the situation of needing to sell the large home where they raised their families or enjoyed their mid-life empty nest, replacing the space with their hobby or 2nd career or entertaining friends and family periodically. But the time has arrived that the house is simply too large. They are heating and cooling, and cleaning spaces they rarely use so they want to downsize or resize while they can get a good price for their home.

One of my clients wants to move out of their 5,000 square foot home while identifying a comparable smaller home at a mid-range price point – reasonable, at least so we thought.

The search was difficult for these reasons:

  • in the madness of the real estate frenzy of 2021/22 even homes in the higher price points were not presented as well as they should have been – a stark difference between photos online and in person
  • almost every decent home that came on the market received multiple offers within a day or two
  • their competition was no longer just another occupant buyer but now it was large fund investors vying for that property, too

In the case of these kinds of buyers, interest rates don’t bother them too much since, in most cases, they plan to use the equity they have in their current home to purchase the next home or they only plan to keep the mortgage for a few years before they pay it off and live mortgage free. In a couple of cases, they are choosing to use a Reverse Mortgage to help stretch their wealth, therefore, the interest rate is not an issue since they can choose not to make any mortgage payments on a monthly basis.

If you want to know more about how interest rates may affect your decision or that of a loved one to move forward with a sale or purchase, feel free to contact me.

>>Read more about interest rates from the National Association of Realtors.