By Jamie Swann, Contributing Writer
Every seven seconds, a member of the baby boomer generation turns 65. That’s more than 10,000 people a day.
While many are content to “age in place,” millions of baby boomers are making the choice to pack up their belongings and move. According to the National Association of Realtors, 32 percent of buyers in 2015 were ages 51-69.
“The desire to downsize is a key factor for boomers in their decision to move,” said Patricia Sherman, licensed real estate instructor, at a recent Northeast Florida Association of Realtors event.
It makes sense that boomers, who may be living in homes too large for their current needs, want to downsize so they can be in a better position for retirement.
According to the Insured Retirement Institute, only 27 percent of baby boomers are confident they have enough money saved for retirement and 28 percent say they will retire after age 70.
“Aging adults are looking ahead, thinking about their future,” said Sherman. “It’s not just the mortgage. For many, the equity they’ve built up in their home is the largest asset they have.”
U.S. News & World Report says many boomers look forward to moving to a smaller house or a less-expensive neighborhood. The move helps free up equity to pay for travel, medical expenses or other expenses they may face, the magazine said.
But smaller doesn’t always mean older. Modern appliances, energy-efficient doors and windows, large kitchens and open floor plans are priorities for boomers, the magazine said.
According to Placester, 42 percent of people ages 58-66 said heating and cooling costs were “very important” environmental features in a new home.
Among that same age group, 28 percent desire energy-efficient appliances, while 27 percent say energy-efficient lighting is an important environmental feature.
“Boomers are looking for cost-saving features,” said Sherman, “but they aren’t willing to sacrifice convenience or independence.”
According to NAR, more than 57 percent of senior housing purchased in 2015 was in the suburbs and nearly two-thirds of those were detached single-family homes.
Those homes may be within subdivisions or communities that cater specifically to aging populations.
By selecting a community that can accommodate them in varying stages, boomers can retain a vibrant and busy life on their own terms — a quality that has defined the generation for decades, according to Sherman.
“Their lifestyles are constantly changing,” Sherman said. “Features often found among the ‘resort-style’ senior living communities is appealing to aging adults.”
For those in the baby boomer generation that are looking to “age in place,” a reverse mortgage may be an answer to their financial insecurities.
A reverse mortgage allows senior citizens to pull equity from their homes to supplement retirement income.
It is a loan that does not involve repayment, except out of the home’s equity, which happens only when the senior dies or moves out of the house.
Reverse mortgages can be structured as a lump sum payout up-front or as a home equity line of credit, drawn on as needed.
“For the younger crowd opting for a reverse mortgage, I suggest monthly payments. It makes the most sense,” Sherman said. “But if you’re older, take the lump sum.”
Reverse mortgages once had a bad reputation, admitted Sherman.
But new rules issued by the federal government provide many protections for seniors who use a home equity conversion mortgage available only through Federal Housing Association approved lenders.
Among the key changes: The FHA insures the loan, said Sherman. “It’s a non-recourse loan,” she said. “If money is owed at death it’s covered by the FHA insurance.”
Other changes include income testing, where borrowers have to qualify for the home equity conversion mortgage, and reduction in the ability to take a large up-front sum out. Borrowers are no longer allowed to pull all their equity out immediately.
“Reverse mortgages provide options for older adults,” said event attendee Cathy Beam, Realtor at Exit Real Estate Gallery. “Seniors are looking for guidance in every option available to them.”