Choices Abound for Baby Boomers & Retirees

Karen KesselAdvice, Real Estate News, Retirement

With the aging population and ongoing changes with the housing market, we are speaking more and more with baby boomers and retirees selling the family home and considering next steps for a lifestyle move that meets their needs and desires.

Baby Boomers were born between 1946 to 1964.   They represent the largest population increase following WWII and the Great Depression. This universal generation has affected everything from housing, design, fashion, the economy, lifestyle and more!

According to the 2016 Census findings, 5.9 million people in Canada are aged 65 and over.  Compare this to 5.8 million who are under the age of 14.   Another interesting stat is the growing number of people living in Canada who became “Seniors” during 2011 to 2016.  This number represented the largest increase in any demographic since 1871!   To give you a perspective of time – this is also the year Prime Minister John A. Macdonald began construction of the Intercolonial Railway, and was only 4 years after Confederation of Canada!  WOW!

Most baby boomers currently reside in townhomes and detached homes.  Looking for a combination of downsizing and lifestyle, they expect to retire & downsize outside major urban areas.  41% of Canadian homeowners who plan to sell are interested in “cashing out”, however 62% are reluctant to sell due to the high cost of buying another (smaller) home.

When speaking with our clients, the discussion of “buy vs rent” continually comes up.  Both choices affect the desired lifestyle, based upon physical and financial situations. Boomers question the price of retirement as the cost of living rises along with life expectancy.

A home is a big piece of personal wealth and provides financial security.  It is and has been part of how we live as a society.  Work hard, save your money and buy a home.  Boomers wishing to still own their own homes have more choices available when “buying” a home or condo.  They are also setting themselves up to build future equity in their new home.  With no capital gains to pay when selling their principal residence, they are safe and secure.

Conversely, boomers selling their homes and considering renting could be sitting on the cusp of the biggest financial move of a lifetime- Cashing-in built-up equity!   Renting removes risk from future downward trends in real estate values.  The peace of mind to simply pay rent and some utilities is also very attractive.  Add to that no mortgage payments, property taxes or maintenance costs.  Life is becoming simple.

The recent trend of boomers opting to rent is allowing them to restructure their cash and investment portfolios to create a carefree lifestyle to downsize, travel and enjoy retirement.

While there is no wrong choice, as there are many factors that affect either whether to “buy vs rent”.  We would encourage you to seek advice and guidance from your financial advisor to ensure your portfolio is tailored to meet your goals now and in your retirement years.