So Baby Boomer: Life Tips

Future Sustainable Lifestyle of Boomers?

Whatever Baby Boomers are doing, people want to figure it out.

Just how many of the boomer generation, who have sent their kids out into the world, want to downsize is the subject of debate among an array of groups, including auto makers, home builders, environmentalists and federal policy makers.

Encouraging more people to live in neighborhoods close to their workplaces is an element of President Barack Obama's broader effort to cut U.S. consumption of fossil fuels.  Today, the average American emits 19.8 tons of carbon dioxide per year---since the tendency of Americans is to live miles from their workplaces.

Home builders have been watching consumer preferences shift toward smaller houses the past two years.  Put the turmoil in the home mortgage market and the worst housing price collapse in decades aside--demographers and economists have predicted that many aging boomers would opt for smaller, easier-to-manage dwellings once their children left home.  Those predictions helped spur a surge in loft and condominium developments in many U.S. cities, as well as efforts to develop so-called walkable communities.  So far, the bet hasn't paid off.

Someday, millions of boomers may well want compact, elegantly designed, multipurpose four-cylinder cars to match their luxury loft lifestyles.  But first, someone will make a killing renting boomers trucks to haul away the debris of their consumerist lives.

Source: Joseph B. White in The Wall Street Journal, October 28, 2009

Reverse Mortgage Fraud

As the falling stock market has crushed boomer retirement nest eggs, the number of federally insured reverse mortgages soared to 112,000 in 2008, up from 43,082 in 2005.  HUD forecasts some 165,000 will be originated in this fiscal year.

So far this fiscal year, which ends September 30, HUD has referred 29 cases of suspected fraud to its Office of Inspector General for investigation, up from two the year before.  Jacqueline Felton, who heads up the FBI's mortgage fraud team, says her agency is also seeing an increase.  Indeed, HUD's data on suspected fraud likely understates the extent of the problem.

Emotions can negatively affect financial decisions

The field of behavioral finance seeks to explain the set of psychological biases that affect people's investment decisions.  If you couldn't bring yourself to sell a loser stock, or if you have picked investments because they felt "safe," there's a good chance you're managing your money with your heart and not your head.

So what are these emotion-based behaviors that hurt our investing performance?

One of the more common examples is a so-called "anchoring" bias.  Everyone develops attachments that can be irrational sometimes, whether to a house, a car, even a person.  People can also get overly attached to a particular investment, believing it will reach--or return to--a certain price.

Another type of bias can cause an investor to ignore realities and do nothing--believing that "I can't sell now.  Look how much I have lost!"  This "loss aversion" bias has become more common due to the market turmoil, behavioral-finance experts say.  Because losses hurt so much, investors tell themselves it's not a loss until they sell.  Unfortunately, this investor could end up seeing that stock investment continue to drop.

Investors with an "overconfidence" bias often trade too much and manage their portfolio on a stock-by-stock basis--while assuming they can beat the market, which probably won't happen.

Observers agree it can be difficult for people to recognize the different types of biases in themselves, and even more difficult to overcome them.  However, while many of these biases exist, investors and financial advisers can work to lessen some of their effects.  Stepping away from the situation before you make a quick investment decision also can help.

Source: The Wall Street Journal, June 8, 2009 

Boomers Mess Up Housing Market

Those hoping for a quick rebound are likely to be disappointed.  Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012.  Even when they stop falling, prices may scrape along the bottom of the rut for years.

What's more, no one can assess the outlook for housing without considering the effects of 78 million aging Baby Boomers. "A lot of people have theories about the Baby Boomers," says William Frey, a demographer and senior fellow at the Brookings Institution, a think tank in Washington, D.C., "but boomers always have tended to confound expectations."

Generational Real Estate Buying Styles

The real estate industry is experiencing gigantic changes in customer demographics.  One major change pertains to the average age of today's buyers.

According to a recent report by the National Association of REALTORS, Gen X'ers and Y'ers are together the second biggest generational group, right on the heels of the Baby Boomers. The Joint Center for Housing Studies at Harvard University reports that the average homebuyer today is a Gen X'er.  Baby Boomers, Gen X'ers and Gen Y'ers each approach a real estate transaction differently. That means learning to work effectively with each generation matters.

The most important housing characteristics for Baby Boomers are ease of home maintenance, easy access to quality wellness attention, and close proximity to cultural offerings.  Statistics show that boomers place the most value on the "traditional" services provided by a real estate professional.

Boomers' home downsizing

It's hard enough under normal circumstances to figure out how much is needed to ensure a comfortable retirement.  But the mix of slumping housing prices, oil at around $140 a barrel and volatile financial markets makes it particularly tough today.

With energy analysts increasingly convinced that high oil prices are here to stay, and stock and bond markets expected to remain under pressure, living plans may need to be rethought.  Because of the drop in housing prices, the median household wealth of homeowners aged 45 to 54 will have fallen by 25% between 2004 and 2009, according to economist Dean Baker and research associate David Rosnick of the Center for Economic & Policy Research.  Even America's wealthiest 20% will have seen their balance sheets plunge by 27%.

The most practical approach is simply to downsize, suggests Henry K. "Bud" Hebeler, author of "Getting Started in a Financially Secure Retirement" (Wiley & Sons).  That's not a very popular chocie, however.  One reason may be that families often find that a smaller home doesn't come with a much smaller purchase price.  A two-bedroom condominium in an attractive part of a city with all the amenities typically sells for nearly the price of a comfortable four-bedroom home in a tony suburb.  "People don't save money on the purchase price by going from 2,500 square feet to 1,700 feet because they [still] want the granite countertops and the Jacuzzi tub," says Joel Larsen, a certified financial planner with Financial Strategies Group in Davis, CA.

Yet, large homes cost a lot more to maintain and are subject to higher property taxes.  The saviings from running a small home compound over time.  Plus, as we age, few of us want to perform maintenance.

Downsizing could become more common as energy costs rise and the population ages.  Hebeler advises anyone contemplating a smaller residence to act sooner rather than later.  "I believe that over the next decade, small homes are going to be relatively pricer than large ones, at least on a dollars-per-square-foot basis," he says.  Smaller homes will be in more demand, and many larger homes will be on the market.

Source: BusnessWeek, July 14, 2008

Retirement Choices on Where to Live

You can live in Phoenix, Arizona where...

You are willing to park 3 blocks away because you found shade.

You've experienced condensation on your butt from the hot water in the toilet bowl.

You can drive for 4 hours in one direction and never leave town.

You have over 100 recipes for Mexican food.

You know that "dry heat" is comparable to what hits you in the face when you open your oven door.

The 4 seasons are: tolerable, hot, really hot, and ARE YOU KIDDING ME??!!

You can Live in California where...

You make over $250,000 and you still can't afford to buy a house.

The fastest part of your commute is going down your driveway.

You know how to eat an artichoke.

You drive your rented Mercedes to your neighborhood block party.

When someone asks you how far something is, you tell them how long it will take to get there rather than how many miles away it is.

You can Live in New York City where...

You say "the city" and expect everyone to know you mean Manhattan .

You can get into a four-hour argument about how to get from Columbus Circle to Battery Park, but can't find Wisconsin on a map.

You think Central Park is "nature."

You believe that being able to swear at people in their own language makes you multi-lingual.

You've worn out a car horn.

You think eye contact is an act of aggression.

You can Live in Maine where...

You only have four spices: salt, pepper, ketchup, and Tabasco.

Halloween costumes fit over parkas.

You have more than one recipe for moose.

Sexy lingerie is anything flannel with less than eight buttons.

The four seasons are: winter, still winter, almost winter, and construction.

You can Live in Texas where...

You can rent a movie and buy bait in the same store.

"y'all" is singular and "all y'all" is plural.

"He needed killin' " is a valid defense.

Everyone has 2 first names: Billy Bob, Jimmy Bob, Mary Sue, Betty Jean, Mary Beth, etc.

You can live in Colorado where...

You carry your $3,000 mountain bike atop your $500 car.

You tell your husband to pick up Granola on his way home and he stops at the day care center.

A pass does not involve a football or dating.

The top of your head is bald, but you still have a pony tail.

You can live in the Midwest where...

You've never met any celebrities, but the mayor knows your name.

Your idea of a traffic jam is ten cars waiting to pass a tractor.

You have had to switch from "heat" to "A/C" on the same day.

You end sentences with a preposition: "Where's my coat at?"

When asked how your trip was to any exotic place, you say, "It was different!"

Or You can live in Florida where...

You eat dinner at 3:15 in the afternoon.

All purchases include a coupon of some kind -- even houses and cars.

Everyone can recommend an excellent dermatologist.

Road construction never ends anywhere in the state.

Cars in front of you are often driven by headless people.

Author Unknown

Foreclosure Sharks

With the housing bust in full force and millions of Baby Boomer homeowners facing foreclosure, the sharks within the real estate industry are being spotted.

Although there are legitimate, mostly nonprofit, operations that help distressed homeowners, there's also a growing army of deceptive outfits that prey on and profit from this troubled group.  While statistics on these schemes are hard to come by, law enforcement authorities confirm that foreclosure scams are rising sharply.  Ten states have recently enacted laws aimed at protecting homeowners.

In most states, it's not illegal for one person to persuade another to sign his or her home over.  And proving it was done through deceptive means can be tricky if the promises to help the owner were made verbally, as is often the case.   So many victims have little recourse except through civil proceedings.  But with the number of foreclosures estimated to soar to more than 2 million over the next couple of years, more policymakers are scrambling to keep the situation from turning into an epidemic by enacting tougher penalties for such practices.

While the schemes vary in their mechanics, all follow a similar pattern. 

An individual or group, in the guise of helping a homeowner avoid losing his or her house, persuades the owner to transfer the title to the rescuer or another designated buyer.  Most commonly, the rescuers present what they say is a refinancing through a designated investor, or they arrange a deed transfer with a rent-to-own plan that will supposedly allow the owners to buy back their homes down the road.  But usually buried within the stack of closing documents is a so-called quit claim, or deed of gift, in which the homeowners effectively sign their houses over to the investor.   At that point, the rescuers charge the former owners rent high enough to ensure they can evict them and pocket the equity built up in the property.

Boomer homeowners in distress should remind themselves, "If the refinancing plan sounds too good to be true, it probably isn't."

Source: BusinessWeek, June 25, 2007

Boomers' Vacation Home

Vacation home sales rose 4.7% to a record 1.07 million homes in 2006 from 1.02 million in 2005, according to the National Association of Realtors annual survey.

The profile of a typical vacation home buyer in 2006 was a 44-year-old Baby Boomer with a median household income of $102,200.  Typically, these vacation homes were a median of 215 miles from the owner's primary residence, though 42% of vacation homes were closer than 100 miles and 32% were at least 500 miles away.

The most popular location for the homes was in rural areas; 29% of the homes were purchased in the country.  But 24% were located in resorts, 22% in a suburb and 10% in an urban area or central city.  Sixty-seven percent of the homes were detached single-family houses, 21% were condos and 8% were townhouses or row houses.

79% of vacation home buyers wanted the property as a vacation or family retreat and 28% planned to use it as a primary residence in the future (such as in those retirement years).  The median price of a vacation home was $200,000 and the share of second-home sales were 36% of all existing and new residential real estate transactions in 2006.

Source: The Wall Street Journal, May 1, 2007

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Retiree Nomads

Searching for the "perfect" destination to live out your retirement years can take you from place to place...until you find the one that finally delivers you a place that reminds you of home.

Some couples have dreams of living where their grandchildren can come to visit....until they find out that kids don't go to grandmother's house anymore.  You, as grandparents, have to go to the kids' house where all their activities and friends are.  So it really doesn't matter where the grandparents live as far as their children are concerned.

Author Ciji Ware of "Rightsizing Your Life" explains how different places to live fit into different seasons of your life.  "The 50s are the empty nest years," she says.  "In the 60s, many people are slowing down an old career and maybe starting a new one.  In the 70s, there may be grandchildren coming along.  And in the 80s, you may have health needs to think about...You may not ever find the perfect retirement nest, but you'll find what suits your age and stage currently."

Joe Dineen and Ginny Cooney retired to Martha's Vineyard from the Boston suburbs but got tired of having to elbow their way onto the overcrowded ferry.  Seeking a change of pace, they moved across the country to Sun City, AZ.   After that, they lived on Vancouver Island, British Columbia, in balmy Boynton Beach, FL and, as of last fall, in a lakeside retirement community in southeastern Michigan.  "We wanted to come back to a place with four seasons," says Mr. Dineen, 71.

Nomads, unlike those who stayed at home or those who retired to one place, relocate when they retire, then pick up stakes a few years later and move again.  And, maybe, even a few times after that.

Source:  The Wall Street Journal, March 31, 2007