Survey: Older Adults Struggle with Housing Costs at All Income Levels

Nearly 1 in 3 adults over the age of 45 have struggled to keep up with housing costs over the last 12 months. While these costs predictably hit those with lower incomes harder, the issue is present across all income levels and retirement timelines. This is according to a new survey conducted by real estate market observer PropertyShark.com.

For those earning anywhere between $20,000 to $40,000 annually, 42% of these respondents reported struggling with their housing costs. That figure drops to 27% for those earning between $40,000 and $60,000 per year, but even relatively higher incomes between $80,000 an $100,000 per year still see 20% of respondents report housing cost struggles.

The highest income bracket for older adults, those earning over $100,000 a year, still sees 6% of respondents reporting struggles with housing costs, emphasizing a degree of universality to financial issues related to housing for older Americans.

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The reports of housing cost struggles are also present when looking at respondents who report different prospective timelines for their retirements.

“The most financially stable category seems to be those looking to retire within 5 years; just 23% of this group reported housing cost burdens,” writes Eliza Theiss, PropertyShark’s senior writer on real estate trends in the U.S. “Respondents looking to retire in 5 to 10 years, as well as those planning to retire in more than 10 years, noted similar rates […]. Those who have already retired experience housing cost burdens at a rate of 28%, as compared to a worrisome 44% of those respondents who don’t plan on ever fully retiring.”

What these findings suggest is that outside of shifting attitudes for older adults related to work, many older Americans find a strong need for continued work to keep up with the costs associated with daily life, Theiss says.

Additionally, many older Americans are not aware of government-sponsored assistance programs in the realm of senior housing, with only 14% of respondents relating that they are “somewhat familiar” with these programs, Theiss writes.

Other findings from the survey results include that over 50% of respondents desire to remain in their current homes for their senior years, but as many as 1 in 3 don’t ever plan to retire. 3 out of 5 respondents have less than $100,000 saved for retirement, and only 4% have at least $1 million saved.

See the full survey results at PropertyShark.

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  • Sad to see what are retirement dreaming seniors are going through today. Many factors play into this. Lack of planing for the later years, poor increases in social security income, piling of debt, medical expenses and plain old cost of living.

    I remember back in 1987 when we had the big stock market crash, many lost their entire portfolios and planed retirement income for the future years. So many factors, to many to actually go over!

    Not to tout our industry, but those with plenty of equity in their Homes, a reverse mortgage can be a salvageable retirement solution.

    John A. Smaldone
    http://www.hanover-financial.com

    • I was with a 91 year old client yesterday that wants to stay in her home which includes a large lot, a huge barn workshop, 2 garages, etc. She is blind with limited mobility and only utilizes about 500 square feet of the 3 bedroom home.

      It makes no sense for her to stay in this home. Unfortunately a reverse mortgage looks like an easy way to kick the can down the road and avoid making an unpleasant decision today.

      OK, maybe a 91 year old gets a pass. But I see borrowers, usually widows in their 70s and 80s, in these enormous properties unnecessarily stripping thousands of dollars of equity paying interest and MI.

      For my client, we are exploring other options, such as an installment sale with a lease back, life estate with owner carry back financing, etc. RM is further down the list.

  • Skeptics are normally uncomfortable with the conclusions in the linked article. Skeptics generally reject the conclusions in such articles at their face.

    The authors in the linked article have a 95% confidence level that the data collected was representative of the population as a whole with a 3% margin of error. But what does that mean?

    Many would say that the data collected can be relied upon for its accuracy. That is utter nonsense. What it means is that the authors have a 95% level of confidence that if the same data was collected from another sample of equal size using the same statistical methods, the ANECDOTAL information collected would be within a 3% margin of error.

    Yet nowhere is the statement made that the anecdotal data was subjected to verification for ANY survey participant. That means that the data totally relies on the instantaneous recollections of participants who have a tendency to exaggerate or remember one set of data when actual data was significantly different. Further instantaneous recollections are less reliable after late middle age.

    Verification is expensive, intrusive, and notoriously difficult to obtain through survey participants. Nothing in the linked article suggests that any verification process was attempted. Normally where verification is made, credit is claimed by the authors. Since no claim is made, one has to assume that the data is anecdotal rather than empirical in nature. That does not bode well for relying on such data unless the need of the user is simply trying to understand people’s opinions on the questions being asked. Further, one would need to know the exact questions asked in the survey in order to further understand the responses given.

    So while the article is informative, it lacks credibility other than as an anecdotal survey lacking any verification of participants’ responses. Reader beware. One personal already has concluded that the data was sufficiently reliable so as to make conclusions, that even the authors did not make.

    ——————————————————-

    There is one conclusion in the comments that is of particular interest and states: “Not to tout our industry, but those with plenty of equity in their Homes, a reverse mortgage can be a salvageable retirement solution.” That is assuming all seniors with “plenty of equity” will be able to qualify for a reverse mortgage.

    For example, a homeowner tells us that a home has $3,000,000 in home equity. Most of us would agree that is an enormous amount of home equity. Right? Then in the next thirty seconds the homeowner tell us that his home equity is about 50% of his home value and that he is a 64 single retiree. Further his assets without considering the value of Social Security or his motion picture industry pension is about $250,000. Who will close a reverse mortgage with this gentleman on the information above? He will have to downsize to qualify for a reverse mortgage.

    The idea that reverse mortgages are available to seniors with “plenty of home equity” is a very common mistake especially with novices. Many of us have experience with borrowers coming to close ready to pay off a sizeable portion of their existing debt in order to qualify either for a HECM or a proprietary reverse mortgage. So don’t make the rookie mistake of not pursuing a prospect simply because they don’t have “plenty of home equity.”

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