Your Reaction?
Source: Merrill Lynch
You may have more freedom in
retirement than you think. Despite ongoing concerns about the size of
nest eggs in America, a new study finds that retirees across the nation
are enjoying high levels of freedom and satisfaction, especially when it
comes to their homes.
Due to newfound freedom from work and family
restrictions, fewer financial concerns, and unprecedented longevity,
today’s retirees are able to focus their time and money on their own
lifestyles. Merrill Lynch finds that 65% of retirees say they are living in the best homes
of their lives. By age 61, the majority of people (56%) feel free to
choose where they most want to live, with the level of freedom
increasing until their early 70s. As the chart above shows, only about
30% of people in their 40s or early 50s say they are free to choose
where they most want to live.
“How and where our nation’s aging population chooses
to live will have widespread implications on the way homes are designed,
the resources people will need, and how communities and businesses
nationwide should prepare,” said Andy Sieg, head of Global Wealth and
Retirement Solutions for Bank of America Merrill Lynch. “For most
retirees, their home is more than just a financial consideration — it’s a
place where family and community come together, and can represent
treasured memories or independence.”
Let’s take a look at three ways retirees are living in the best homes of their lives.
2 Reactions
Source: Merrill Lynch
1. Goodbye mortgages
Nothing says freedom like escaping the shackles of a
mortgage. While the housing crisis of yesteryear certainly derailed
financial plans for some Americans, the majority of older homeowners do
not have a mortgage. In fact, 72% of homeowners 65 and older are
mortgage free. On average, home equity among these homeowners totals
$212,800, providing a confidence boost if the need or desire to sell
ever arises. Older households represent 22% of all U.S. households, but
account for 40% of all home equity.
Merrill Lynch advises in the report:
Assess whether you should pay off your mortgage before retirement. Paying off your mortgage before you retire can create greater financial security and peace of mind. But there are many factors – such as your risk tolerance, interest rates, taxes, estate planning, and other investment opportunities – that you should factor into this decision.
Your Reaction?
Source: Merrill Lynch
2. Size matters
Retirees often find the freedom to make a scenery
change. Last year, 4.2 million retirees moved into a new home. This
number is likely to grow over the next decade as the number of older
households in the U.S. is estimated to increase by almost 11 million. In
comparison, growth in the number of households across all other age
groups will be less than 2 million. Overall, 64% of retirees say they
are likely to move at least once during retirement, with 37% having
already done so. A desire to live closer to family is the top reason
among retirees for moving.
Many people assume that once they retire, they will
downsize their home to save money and time, but this is not always the
case. Merrill Lynch finds that 49% of retirees moved into either a
larger home or a same-sized home. The other 51% moved into a smaller
home. Retirees purchasing larger homes are motivated to have a place
large enough for family members to visit and stay with them. Only 19%
say they upsize to have a more prestigious home.
2 Reactions
Source: Merrill Lynch
3. Custom crib
In retirement, home is where the wallet is. Retirees
often have more flexibility, time, and financial resources to create
their dream homes with renovation projects. In fact, older households
account for nearly half of all spending on home renovations, about $90
billion annually. Between 2003 and 2013, spending on home renovations
among those age 65 and older increased by 26%, while all other age
groups experienced a decline or modest growth in spending.
“With increasing longevity and greater freedom, it’s
not surprising that so many retirees are striving to make their homes
even more fulfilling,” said David Tyrie, head of Retirement and Personal
Wealth Solutions for Bank of America Merrill Lynch. “Achieving your
dream home in retirement requires careful forethought and preparation.
Whether moving or staying put, it’s important to carefully consider
expenses associated with current goals and future priorities, including
potential challenges during later years.”
No comments:
Post a Comment