WHAT IS SO DIFFERENT ABOUT US BABY BOOMERS?

Boomers tend to be different than other people medically, financially, physically, risk tolerance, etc. Because of that, the same rules that affect every one, affects us differently. And in some cases there are even rules that enable additional opportunities to us.

We are not treated differently due to discrimination, necessarily, at all. But while the Fair Housing Act protects home buyers, sellers, and borrowers from discrimination based on gender, color, national origin, familial status, color and religion, to most people’s surprise the Fair Housing Act does not, in general, protect us from age discrimination.

In contrast, the Equal Credit Opportunity Act disallows discrimination against people on the basis of age in the mortgage lending industry. However, there are some Federal regulations that offer special opportunities and options only to persons over a certain age (Boomers).

Here are some examples of our changing circumstances as we mature in to the 50’s and beyond. These circumstances can alter how the rules affect us:

• Net-worth to income ratio
  Many persons in their twenties have a relatively high income to net-worth ratio. But as they reach their 50’s the ratio somewhat evens out with higher income and higher net worth. After retirement, the financial profile tends to flip upside down from 30-40 years before.
  This can cause lenders to treat us different than younger people. Not because we are older, but because our finances are different when we are older.
  
• High capital gains tax liability
  A 30 year old has not had nearly so long to accumulate real estate equity over time as a 60 year old. Many people approaching retirement have accumulated more than the tax-exempt limits set by the IRS for selling real estate tax-free.
  
• Second-homes and Vacation-retreats
  Many second-homes and vacation-retreats are purchased by individuals when they first reach their 50’s. Often this is to provide a place for mom and dad to enjoy getaways from their empty nest. Or to use the property as a warmer winter residence or cooler summer residence. Or it may be used to take teenagers on active outdoor vacations. Or it may be used later to foster reunions of extended families, with grandchildren, nieces, nephews, et al.
  
• Retirement investments
  Persons in their 20’s to 40’s may sometimes be focused more on owning a single primary residence large enough for a growing family. But about the time the nest empties, or simply as one ages, some of us begin turning toward real estate as a long term investment vehicle to help fund retirement. (See separate post on self-directed IRA investments in real estate, as an alternative to stocks and mutual funds.)
  
• Physical robustness
  A 30 year old may not mind climbing a ladder 25’ up to clean out a gutter, but far fewer 55 year olds would do it. A 30 year old home maker typically might tolerate climbing one or two flights of stairs from the laundry room than his or her 60 year old counterpart. A 70 year old person may have lost their spouse and is living alone, with increased need for surveillance. Elderly people tend to have more difficulty reading fine print instructions on a water heater, or electric circuit breaker box, or a new refrigerator. Elderly people may be less tolerant of chilly space heating or drafts. Some people still in a large empty nest in their 50’s simply want less home to clean or a smaller yard to maintain.
  
• Medical, mobility and prosthetic needs
  More elderly people than younger people will need in-home devices, mechanisms, tools and systems for mobility, communications and daily self-help tasks that are easier.
  
• Options for housing
  Few younger people would consider a retirement village as an option when choosing among places to live. But with trends in retirement villages to provide pre-elderly private bungalows and pre-assisted living apartments for active adults, and optional group-meal plans, the line between “living alone” and living alone in a “retirement village” have blurred.
  
• First Time Homebuyers vs. Last Time Homesellers
  Although there has been much attention to First Time Homebuyers in 2009, every homeowner, regardless of government tax incentives, becomes a Last Time Homeseller. Selling a last home is financially very different than selling one home to later buy another. In addition, a senior parent may not “sell” their home at all; but, rather pass it on to family members or an organization. It can be much more complicated, or less complicated, to simply pass along or donate a property.
  
• Medical Insurance
  Medicare can help provide for equipment and services in the home. That can impact the feasibility of remaining in the home versus moving in with family or to an assisted living center.

Do you share these circumstances? Do you have a parent who has gone through these circumstances? Or a friend? We are developing a compendium profile of what’s different about Boomers that affects our real estate transactions. Please send us your own ideas, if we haven’t addressed your thoughts or concerns here.