Challenges facing today’s mature adult home owners

Fast Fact: Over 10,000 Americans turn 65 every day, the largest number in history. Because they have the highest home ownership rate of any age group, their home ownership decisions could impact U.S. housing.

Home ownership has long been a cornerstone of the American Dream, especially for those over the age of 65. While the rate of home ownership for other age groups has decreased in recent years, the number of mature adult homeowners has actually increased. They now represent the largest percentage of homeowners in our country.

Because of today’s economic realities, including the recent Great Recession, in addition to the usual health challenges, many of today’s mature adult homeowners face unprecedented financial and housing-related challenges as they reach retirement.

For example:

  • Over the past decade, the number of mature adult homeowners still burdened with mortgage debt has doubled. The average amount of their mortgage debt also increased a whopping 82%.
  • Many are forced to borrow earlier in retirement than they’d anticipated. Because mature adults today are living longer than ever before, they now face an increased possibility of outliving their money.
  • At the same time, many are finding their income is significantly less than what they’d anticipated, often due to recent unemployment or under-employment as well as slower wage growth. Moreover, historically low interest rates have translated to lower earnings from savings.
  • The combination of less income and more debt is forcing over a third of those over 80 to cut back on food, medications, and other basic expenses.

These factors reinforce the importance of government housing policies homeowners rely on for financial security.

For example, the capital gains exception allows them to sell their homes and retain up to  $500,000 ($250,000 for single homeowners) of the proceeds for their retirement without having to pay capital gains tax. Or the availability of reverse mortgages, which enables mature adult homeowners to tap into their home equity without having to sell their homes.

Because there are so many mature adult homeowners, the decisions they make regarding the financing and sale of their homes, and the type and location of alternative housing they choose to transition to may impact housing supply, demand, and values.

Tell us what you think about challenges facing today’s mature adult homeowners by emailing asktheexpert@shariolefson.com.

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