Monday, August 27, 2012

Baby Boomers and Empty Nesters: How To Prepare for Retirement and Deal with Boomerang Kids, Aging Parents, and the Multigenerational Household

Today, the question facing many baby boomers is how to use or acquire space for an empty nest lifestyle, rather than one focused around raising a family. Instead of bedrooms and rec rooms, craft rooms, home theaters, exercise spaces, and custom workshops frequently take priority. “It’s not about having more square footage—it’s about having the square footage do more," explains BobVilla.com

The The New York Times has a great explanation of what many boomers want after kids move out.

"The houses that many boomers will be building and buying also reflect a desire to downsize. 'Many boomers are empty-nesters; big houses are all about kids,' said Blanche Evans, the editor of Realty Times. 'There is a tremendous move toward condos and smaller, low-maintenance homes. The boomers want to pursue their own interests. They don’t want to spend time on home maintenance. They don’t want a trophy house. Many have done that already.' Ms. Evans says many decorators are telling her that the boomers want to transform the style of their houses along with their lives, trading in a suburban house for an urban loft, for example."

While journalists love to focus on baby boomers in ideal scenarios with their pick of retirement cities and millions of dollars to work with, the reality is that because of the economy, selling to downsize or relocate is not always an option. Many boomers are reluctant to sell yet, fearing they will lose hard earned value. Atlanta Home Improvement recommends that should you choose the renovation route, to renovate with resale in mind down the line-- starting with any areas or appliances that are over 10 years old. That way if you decide to downsize or relocate later, you'll have improved or maintained the resale value of the home. The New York Times writes that when boomers do move to new cities for retirement, they often favor towns in classic retirement locations like Florida or near Vegas where there are tax incentives, planned communities, and developments marketed at retirees, or college towns with "cultural and educational opportunities" as well as "Towns with strong, diverse economies...favored for the part-time jobs they offer. Also important are recreational opportunities, good restaurants and high-speed Internet connections, especially for those boomers who want to work from home."

Many boomers are even mirroring the trend frequently attributed to millennials for urban living, as well as renting upscale properties. Jon Talton of the Seattle Times explains that just as "Many young people don't want the post-World War II, car-dependent suburban lifestyle. They want the energy and convenience of cities. Most of these will be renters, at least for a time. Empty nest baby boomers are also picking cities, although more of them have the capability to buy." This can be seen in Chattanooga at the WholeLife development on Mountain Creek Road, "Targeted toward baby boomers, the community will have 104 apartments, each with a two-car private garage and access to a 10,000-square-foot clubhouse, a game room, a saltwater swimming pool, indoor walking track, a large exercise facility designed by The Cooper Institute, a 24-7 concierge, and on-site medical care and a wellness coach."

Increasing numbers of adult children are moving home
With so many options for the empty nester, it can be hard to decide which route to take. Not all retirement or post-teenage lifestyles include complete freedom from the responsibilities of family. Many baby boomers are seeing adult children return home because of the tough economy, are finding themselves in charge of aging relatives in need of at-home care, or are sandwiched in between both scenarios. Both of these situations have dissuaded many baby boomers from downsizing immediately. As many as 15.8 million adult children are dependent on their parents and have moved back home. Yet Forbes.com explains that the situation isn't all bad, although it can put a strain on boomers' ability to save for retirement, "With the sluggish real estate market, many Baby Boomers can’t move and downsize as they may have planned. They are stuck in large family homes they don’t need any more. With an estimated 1.5 million homes now in “shadow inventory” (not currently on the market but owners wishing to sell), selling the family home may be a long term proposition. Renting out space at a discounted rate to adult children may be the solution that helps both parties." Even if parents don't choose to rent, the short-term investment of a few thousand dollars in an adult child's well-being can lead to cost savings later by helping them get better jobs and save money even if they are un or under employed.

Multi-generational families are increasingly common
Some solutions for the return to multi-generational households include mother-in-law suites, which are a popular option for current homebuyers who want to accommodate returning children or ailing parents, whether they are searching for a new property, renovating, or adding on. Seattle has even created a program that allows for so-called accessory dwelling units, which are essentially mother in law cottages. This program has not only served the needs of multi-generational families, but also feeds the trend for closer-knit, more urban communities by creating a "gentle, scarcely visible increase in density in single-family neighborhoods." Another option is the conversion of two-car garages into living spaces. What's more, the adjustments builders and remodelers are making to accommodate lifestyles inspired by the economy could be very profitable in years to come. "Whether it’s smaller social spaces to make room for larger guest rooms, study areas that used to be elongated kitchens, or little spaces for shoe storage, the things that multi-generational families create on their own will become popular selling pitches in years to come," says Kiesha Joseph of The Housing Forum.

If you are considering your options as an empty nester, and/or future or current retiree, this Bankrate.com article has a great breakdown of some of the financial and emotional considerations, and may help you further contemplate your options.