How Boomers Who Rent Suffer From Financial Insecurity

If you were a victim of the 2008 housing crisis you either lost your home due to foreclosure or sold it at a short sale. You vowed right there and then that home ownership was a fool’s game.  You patted yourself on the back at your financial wizardry by becoming a renter vs a home owner.

Fast forward yourself to today and you’re ten years older and if you’re still a renter, you’re ten years poorer. According to this article from Next Avenue, over 50% of older renters (over the age of 65+) are ‘rent burdened’. Both Boomers and Gen Xers are facing a growing rent crunch. With fewer available houses for sale, landlords can raise your rent to anything they sure well please. Can’t pay? No worries. There are plenty of people behind you who can! Once you become a squeezed renter, who basically lives paycheck to paycheck, it’s near impossible to save any money towards buying a home. The higher your rent, the more trouble an elderly person will have trying to pay for their basic needs.

It’s not pretty to be 65+ years old and worry about keeping a roof over your head.

I always believed in home ownership. Renting, to me is a fool’s game. By renting you are making your landlord richer. Not you. Gross rents increase, on average, around 3% per year. Income, however falls by an average of 0.1 percent annually. Sure owning a home is expensive. So is homelessness in your old age. And who wants that? I always advised anyone to at least buy a modest home no later than age 35. Put down 20% cash on your purchase, take out a 30 year, low-interest mortgage and make sure your housing costs,  which include taxes, mortgage and insurance are at least 25% of your take home pay. If the housing costs were above that, you were buying too much house.

No one needs a McMansion. Buy what you need and what you think will carry you and your family into your future. Buy only one home and stay in it! If the home has an unfinished basement or attic, great! You can remodel that extra space sometime in your future when the need arrives and your funds improve. I always recommended any home project be as DIY as possible. No one needs a $75,000 kitchen. Or a $50,000 bathroom.

wood flooring
DH and I are getting ready to install new flooring in our 17-year-old bedroom

This system, to me, was one sure way to guarantee zero home costs by the time you retired at age 65. Many municipalities offer senior citizen discounts on property taxes once you turn 65 which greatly help in defraying housing costs as you age. If you could only buy a home after age 35, try for a 15 year mortgage or double up on your monthly mortgage payment or just make one extra monthly payment per year to reach your goal of debt-free senior living. With recent low-interest mortgages, owning a home is easier and more affordable than those harrowing housing nightmares of 2008. Owning your own home means never having a landlord raise your rent or tell you when to leave or vacate the premises.

Older Americans who own their own homes are much more financially secure than renters. Older home owners also have better health when compared to their renting peers. As elderly renters age, they would not be able to modify their apartments to match their ailing health and related disabilities, as you could in your own home.

DH and I were fortunate enough to sell our first home together in 2001, long before the housing crisis came along. We bought the home in 1985, held onto it (while constantly upgrading it) for sixteen years. Our kids had moved out of the home and we no longer needed a four bedroom home. We bought the home for $135,000, put 52% down, and when we sold it we earned enough equity to custom build a 1120 sq ft. downsized home, on 3.5 acres of land and purchase two brand new cars (to start our new downsized life). We also had enough cash left over to invest so that I was able to retire at the age of 50. DH continued to work. You can’t accomplish financial achievements such as this by being a renter. Period.

We’ve been living mortgage and car loan free since 2001. So, when the Housing Crisis of 2008 hit, DH and I felt hardly a pang. DH went through a few lean years as far as work was concerned but because we were debt free we were able to survive, keep a roof over our head, food on the table and gas in our vehicle tanks! If we were renters, we’d be out on the streets, for sure.

When it came time last year to upgrade all our 17-year-old kitchen appliances, we adamantly refused to purchase the common stainless steel models that most everyone just has to have! First off, stainless is way over priced, hard to keep clean AND they’re basically the same exact models as their white counterparts. We found that the only difference between the stainless steel models and their white versions was the price. The white models were hundreds and hundred of dollars cheaper! We upgraded to white, which work fantastically and our retirement savings account was untouched.

kitchen
Current new kitchen: white appliances (NOT stainless), quartz countertops (NOT granite!)

I don’t think either DH or I will ever forget the Housing Crisis of 2008. It was a very scary time for all of us. We made it through unscathed because we lived within our means, didn’t get caught up in the housing frenzy, kept our cool and our credit cards at bay. Being retired and never worrying about having a roof over your head or choosing which bill to pay is priceless.

Live well and prosper, my friend. Live well and prosper.

 

 

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