Most Older Americans Age in their Homes

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Retirees are apparently unpersuaded that it’s a good idea to convert their substantial home equity into some retirement income.

One way to tap this home equity is through state programs that defer older homeowners’ property taxes. The programs are offered in many states, but very few people take advantage of them. Retirees are also skeptical about the benefits of converting their equity into income using a federally insured reverse mortgage: only about 50,000 older homeowners, on average, get them every year.

A big concern is that if they ever sell the house, the back taxes or the reverse mortgage must be paid back – with interest.

But a new study by the Center for Retirement Research finds that this is an unlikely scenario for the majority of retirees, because they rarely move or don’t move at all.

The researchers constructed a picture of how Americans’ living situations change between their 50s and the end of their lives by combining the data for two separate age groups. They matched the households in one group, who were between age 50 and 78, with similar but much older households in the second group and then followed the second group through most of their 90s.

The researchers found that 53 percent of this constructed sample of homeowners never moved out of the house they owned when they were in their early 50s.

Another 17 percent relocated around the time they were retiring and then generally stayed put. Although the households in this group tended to be more educated and better off financially than the people who never moved, both groups ended up with substantially more housing wealth than the people who moved frequently.

The frequent movers – 14 percent of the households in the study – had been through more financial hardships. They were more likely to have just one person in the couple earning money, and they had more children and experienced more unemployment.

The remaining 16 percent illustrate the wild card facing all retirees trying to plan for the future. Medical problems such as dementia or a physical impairment eventually forced many of them to move into a care facility, such as assisted living or a nursing home.

Older Americans overwhelmingly say in surveys that they hope to grow old in their own homes – and their actions back this up.

Their stable homeownership patterns indicate that tapping home equity could be an option for more homeowners, the researchers concluded.

To read the entire study, authored by Alicia H. Munnell, Abigail Walters, Anek Belbase, and Wenliang Hou, see “Are Homeownership Patterns Stable Enough to Tap Home Equity?”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

Edward Hoffer MD

It is important for this group to proactively make their homes more “age-friendly” by such simple expedients as installing grab bars near the tub/shower, having railings at all outside steps (even just a few), having adequate lighting near inside stairs and removing scatter rugs. Preventing one fall is worth the effort.

Denise Clark

Yes, but be careful. We are dealing right now with a mother whose home value is underwater due to equity loans (one acquired within the past two weeks!). The bank will be foreclosing within a year since she doesn’t have the income to support the debt load. An FHA reverse mortgage is worthwhile if one qualifies. Read Wade Pfau’s book on the subject for details.

Paul Brustowicz

I live in a 55+ community where about 40% of residents are widows/widowers/single. Even with health issues,no one wants to relocate. They love their homes,community, and friendships.
This is the fourth and probably final, house we will own. Unless I win a lottery jackpot, I am staying put.

Steven Boston

Interesting to read from this blog, Thanks.

GAYLE Dedelow

My mother insisted that she stay in her home in a very nice neighborhood. She fell once and ended up in a nursing home. My brother and I wanted her to check out assisted living but no way would she do it! Her biggest problem was being a lonely old widow. She may have been able to enjoy herself, had she moved.

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