Your Money: Sharing Family Getaways Without Any Cottage Conflicts


Picture it: 40 picturesque acres nestled in Wisconsin lake country.

That is the ideal getaway the grandfather of Chicago financial planner Tim Obendorf’s wife built around 50 years ago. Then the property passed to the next generation, with ownership shared by four people.

Now they are thinking about the next generation: 11 potential owners.

Without the right planning, that paradise could turn into hell.

As brothers, sisters, parents, aunts, uncles, cousins and grandparents gather this summer at family homes to go hiking, canoeing or swimming, there will also be arguments over schedules, property taxes or mortgage costs, and upkeep duties, along with the thousand other matters that come with shared homeownership.

“Whenever a number of families are under the same roof, conflicts are going to arise,” said Jill Shipley, managing director of family dynamics for Abbot Downing, a division of Wells Fargo that handles high-net-worth families and foundations.

That is why Obendorf’s family has already logged a couple of family meetings. “It’s never going to be perfect, but you have to decide you value the place, more than the hassles of working through family issues,” said Obendorf.

It is not surprising that vacation homes have become a point of contention. Many vacation homeowners are baby boomers: They possess the bulk of the nation’s assets and are projected to hold over 50 percent by 2020, according to a study by the Deloitte Center for Financial Services. They are now beginning to retire as they hit their 60s and 70s.

The potential problems are plentiful: Is the place big enough for everybody? Who gets it on July 4th weekend? Do they split costs equally? Who cleans up, handles repairs, or stocks the fridge?

And the big one: When the owners eventually pass on – who gets the place?

How can families get the most out of shared vacation properties this summer, without either going broke or killing each other? Some tips from the experts:

Draw Up a Calendar

Just like season tickets for a sports team, some dates will be in high demand. So if the property is not big enough to handle multiple families at once – or, let’s face it, you just do not get along – pick your spots. “Establish a rotating lottery each year, and allow each family member to pick their respective dates,” suggests Kevin Reardon, a financial planner in Pewaukee, Wisconsin.

Write Down a Policy

Everyone has different opinions of what a getaway should be, so hash it out and put it all down on paper. One key item: Whether ongoing costs like property taxes, homeowner’s association dues and repairs are split equally, or allocated based on usage.

Create an Opt-out

A sure way to guarantee family resentment: One member being forced into an arrangement they do not want. If a family cottage is being passed to the next generation, allow an escape hatch that permits one member’s share to be bought out by their siblings. After all, not everyone might be able to use the property to the same extent, especially if they have moved far away.

Bring in a Pro

Siblings, of course, do not always get along. In fact, 15 percent of adult siblings report arguing over money, according to a new survey from Ameriprise Financial. To make sure everyone is heard, bringing in a trained facilitator is probably your best bet, advises Shipley.

Have the Discussion Now

“I have been in many family meetings where the kids ask, ‘I wonder what mom and dad would have wanted?'” says Shipley. So if you are fortunate enough that the family matriarch and patriarch are still around, arrange a family meeting and find out what they envision for the property in the decades to come.

Maybe they want it to stay in the family, as a legacy for the grandkids. Or maybe, because of family circumstances like far-flung siblings, it would be wiser to just sell the property and split the proceeds.

Set up a Trust

One way to take future financial squabbles out of the equation altogether: If families have the resources, they should create a trust to “fund the maintenance and ongoing use of the property in perpetuity,” says Shipley. “That is one solution to reduce conflict, and keep the property in the family for generations.”




Written By: Chris Taylor
Source: Reuters

Why Retirees are Moving Again

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Provided by US News & World Report

During the recession of 2008 and for a long time afterward, moving dropped off the map, especially for people who were retiring. For some years after the recession began, according to the Brookings Institution, both Florida and Nevada actually suffered out migration – not because so many people were moving out of these states, but because nobody was moving in.

For half a decade retirees stayed close to home. They couldn’t sell their house, so they couldn’t move. Many people were forced to retire early, which meant their finances were even more stressed. Many baby boomers also still had kids in school, and so they didn’t want to move anyway.

But now things have changed. Moving is back in style. In addition to new retirees, there is a backlog of people who retired a few years ago who now want to move out of big expensive states and into warmer, less expensive states.

The traditional retirement havens in Florida and Arizona still pull in many retirees. Last year the Phoenix metropolitan area topped the list of cities gaining population among people 55 and older. Tampa, Orlando and Jacksonville were in the top ten. But the Carolinas are also drawing their share of retirees, and a lot of retiring baby boomers are setting off for smaller cities like Nashville or Austin.

Here are the five main reasons retired people are now moving:

They can finally sell their house. The real estate market suffered a historic slump during the Great Recession, and it has been slow to make a comeback. But now both sales and prices have returned to more normal levels, meaning people in California and the Northeast – and even in the Midwest to a lesser degree – can finally sell their homes. Fewer people are underwater on their mortgage, which means they have more equity, while mortgage rates are still low and credit is easier to obtain.

Their stock portfolios have recovered. Baby boomers were not only frozen in place for half a decade, but they suffered huge losses in their savings and retirement nest eggs, which made them more cautious and less likely to pull up stakes and start a new life. Now that markets are back near historic highs, baby boomers are flush with more funds to use for down payments, moving costs and all the other expenses that go along with starting a new life.

It’s expensive to live in California and the Northeast. Although many states have slowed the rate of increase on real estate taxes – New York, for example, instituted a 2 percent cap – taxes are still high and going higher, even if at a slower pace. Retirees move to get away from high taxes. But there’s also the high cost of insurance, entertainment, heating and all the other necessities of living in the north.

It’s cold. Global warming may have brought a marginal rise in temperatures worldwide, but that’s cold comfort for those who see the outside thermometer stuck at 20 degrees. The unusually cold and snowy winters of the past two years only add to the motivation of retirees to find a more comfortable lifestyle in a warmer climate. A desire for healthier lifestyles also prompts people to seek out a climate where they can hike and bike and play outdoor sports all year round.

They’re going to move anyway, so they might as well go someplace nicer. Many boomers are moving not to retire, but to take advantage of late-in-life job opportunities. They have been downsized from their full-time careers, and are now looking at lower paying, but also lower pressure jobs outside major metropolitan areas. Along with low-powered jobs or part-time positions, they’re looking forward to gaining more leisure time and paying less “overhead” for their lifestyle.

The countertrend. Despite the fact that more people are moving, the majority of retirees still age in place. So don’t feel left out if you want to stay in your old neighborhood and live near your children and grandchildren. And then there is one countertrend. While most retirees head south, there are some who turn north. Northern states from Maine to Washington are losing population among those age 55 and over. But four states – New Hampshire, Vermont, Idaho and Oregon – are appealing enough to actually gain population among people 55 and over.

Written by Tom Sightings of US News & World Report

(Source: US News & World Report)

To Downsize or Not to Downsize: The Retiree’s Question

© Zillow
© Zillow

Many boomers may decide to downsize their large multi-level houses in retirement, while others may hang onto their homes for family gatherings and passing on to children. What’s the right move for you?

You might want to stay in your home if …

You have a strong emotional attachment to it.

A lot of times the decision isn’t as much financial as much as it is emotional, says Craig Brimhall, vice president of wealth strategies at Ameriprise Financial.

“People envision their grandkids in the spare bedroom, and that’s a very emotional thing. Sure, it makes sense to save money on a home when you can, but if family ties override that, then you may find yourself doing just the opposite of what you said you’d always do,” he says.

Leaving a home will always be somewhat bittersweet assuming you have positive memories of years gone by, Brimhall explains.

“Many people have a tough time parting with the family home. If you aren’t really fired up about moving into a condo, and financially you aren’t being forced to leave, then it’s OK to stay put.”

You want to leave your home and property to your children.

“If you don’t want to let go, your kids probably don’t want to let go,” Brimhall says. “Even if you’re ready to sell, you may find your kids say, ‘Don’t do it! I want the home!'”

Kids sometimes have surprising opinions about what parents should do in retirement, says Judith Chipps, senior vice president of wealth management at Merrill Lynch.

“If there is a good family situation there, talk to your kids. If you have strong family ties in an area and your kids will be involved with you, then there may not be a need for you to downsize. If your children want you to be involved with their children and they all live nearby, that would be a very strong input into the decision-making,” Chipps says.

You don’t want to move or don’t want a major change.

If the thought of moving and meeting with a real estate agent fills you with terror, you may not need to make a change.

“Psychologically, if this is going to send you into a tailspin and you aren’t going to be happy, then is it worth it? Probably not,” Brimhall says.

If you’re doing the math and you find you’re going to save only a few thousand dollars every year and will be less satisfied, that amount just isn’t worth it.

“If you think about it but you feel like, ‘All my memories are here and I just can’t go through with a big move,’ then I think that’s a sign you shouldn’t uproot yourself,” he says.

With that said, the move itself is a short-term inconvenience, and retirees have to look at the big picture.

“Moving is admittedly a really bad weekend, but then it’s over,” Chipps cautions. “The hassle of moving should not drive the downsizing question.”

You might want to consider downsizing and relocating if …

You want to be closer to grandchildren.

Proximity to grandkids and family is a big consideration for many retirees, Brimhall says.

“I see it a lot of people moving cross country or around the world to be closer to grandkids. It’s a hot button issue, and many people are willing to make the move, regardless of cost.”

Because most retirees don’t have the financial means to keep both their family home and buy something closer to the grandkids, downsizing or selling your current home is the most common solution.

You’re on a fixed income and the cost/upkeep may be too much for you.

When living on a fixed income you may find it difficult to keep up with the expenses that go along with a larger home, not to mention that its maintenance may become more difficult as you get older, says Leslie Tayne, author of Life & Debt and founder of Tayne Law Group.

“Downsizing to a more affordable home or condo is usually a better option,” Tayne says. “Making a decision to downsize can be very difficult because it is often very emotional; however, although your home is filled with memories and sentiment, it may be more practical to downsize so you are able to live within your means during retirement.”

You want to travel frequently

If you envision a retirement in which you can shut the door behind you and not have to worry about leaky water heaters and roofs, downsizing to a smaller apartment or condo may be the best decision, Chipps says.

“A smaller place with very little upkeep makes sense for people who want to be more mobile,” she says.

You may need a single-level home for medical concerns

If your larger family home would need to be completely retrofit in the event of an injury or needing a wheelchair, a smaller one-level home may make the most sense, Brimhall says.

“It’s not pleasant to think about, but will your house be suitable for you when you are no longer ambulatory? People are living longer and you have to think about the reality of becoming immobile,” he says.

In addition to needing a home equipped for medical care, many retirees may also want to consider the need for a home that is closer to medical facilities, good doctors and hospitals.

Written by Kathryn Tuggle of TheStreet

(Source: TheStreet)

Where will 78 Million Baby Boomers Retire?

© Jamie Grill/Getty Images
© Jamie Grill/Getty Images

With roughly 78 million baby boomers at or near retirement and average life expectancies climbing, many independent-minded seniors are resisting the pressure to move to often costly retirement communities or assisted living facilities and are instead making plans to stay at home.

“Aging in place” is the new mantra for many older Americans and there has been a surge in community-based programs and activities to help them remain in their homes. Indeed, the rate of homeownership among people 65 and older is a remarkable 78.5 percent, compared with a homeownership rate of 63.5 percent among the general population. And that isn’t likely to change anytime soon.

The challenge for many to both stay relatively healthy and hang onto their homes is formidable. An estimated 80 percent of seniors in the U.S have chronic health conditions that potentially could force them into nursing homes or assisted living without adequate health care support. And while 87 percent of seniors said in an AARP survey that their fondest desire is to remain in their homes and communities, depleted incomes and savings are making that harder and harder for many Americans.

So what to do?

A new report by a task force of the Bipartisan Policy Center released on Thursday is calling for a “more strategic approach” to linking health care and housing policies to help millions of seniors realize their desire to stay put in their homes as long as possible.

The report is highly critical of federal, state and local health care and housing officials operating in isolation from each other and calls for a more collaborative effort.

“By more tightly linking health care and housing policy, the U.S. has the potential to improve the health outcomes for seniors, reduce the costs incurred by the health care system, enable millions of seniors to ‘age in place’ in their own homes, and improve their quality of life,”   Vin Weber, a former Republican House member from Minnesota and co-chair of BPC’s Health and Housing Task Force, said in a statement. “Making these connections is critical as federal government spending on Medicare, Medicaid, and other health programs is projected to grow much faster than the overall economy over the next 25 years.”

The task force stressed the urgency of the government and private sector moving quickly to develop new ideas and programs for helping baby boomers as they reach senior status. By 2030, more than one in every five Americans will be 65 or older, compared to 13.1 percent in 2010 and 9.8 percent in 1970. In short, in a span of just 60 years the percentage of the population over the age of 65 will more than double.

According to recent Congressional Budget Office study, population aging over the next quarter of a century will be responsible for 56 percent of the growth in spending on major federal health programs. Enrollment in Medicare, the costly program providing health care for seniors, is expected to increase by 16 million people annually. That will lead to a total of nearly 81 million beneficiaries by 2070.

Medicare benefit payments totaled $597 billion in 2014, with roughly one fourth going for hospital inpatient services, 12 percent for physician services, and 11 percent for the Part D drug benefit.

With CBO budget projections showing that mounting Medicare and Social Security costs will greatly add to the deficit over the coming decades, task force members argue that a coordinated effort to help keep seniors both healthy and in their homes may be a critical tool for slowing the growth of the deficit.

The challenges are considerable but far from insurmountable.

On the health care front, seniors with chronic conditions like heart disease, kidney problems, respiratory ailments and obesity utilize high volumes of complex health care services – roughly 84 percent of U.S. health care dollars and 99 percent of Medicare spending, according to the report.

As the population of retirees steadily rises and more seniors try to remain in their homes, there will be increased demand for community-based services, such as transportation to and from doctors’ offices, help in doing household chores, exercise classes and counseling to treat the symptoms of social and emotional isolation.

On the housing front, many seniors – facing diminishing income and personal savings — will need financial assistance in making their mortgage and rental payments.Most seniors will be homeowners, though the number of senior renters will increase dramatically, according to the study. However, many of them will struggle to find affordable housing and will need federal rental assistance.

What’s more, the report notes, “Older seniors are carrying larger mortgage balances into their retirement years, potentially impacting their ability to finance retirement and aging-in-place needs.”

The task force, which includes former Department of Housing and Urban Development secretaries Henry Cisneros and Mel Martinez and former Democratic House member Allyson Schwartz from Pennsylvania, is working to identify cost-effective ways to enable seniors to live more independently and safer. They will also seek ways of increasing the supply of affordable housing for seniors.

The good news in the report is that there already are many community-based programs throughout the country that have “successfully integrated” housing and health care for seniors.

Those include:

  • Stewards of Affordable Housing for the Future, a network of 11 nonprofit organizations that support and provide affordable rental housing for 115,000  low-income seniors and families in 49 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The organization has demonstrated how housing providers “can work more effectively with the health care system, including with accountable care organizations and managed care entities,” according to the study.
  • Vermont’s Senior and Services at Home program, which is operated by the housing provider Cathedral Square. The program is touted for having shown how closely linking the operation of housing and supportive services for seniors can slow the rate of growth of Medicare spending.
  • A handful of  housing providers including National Church Residences and Mercy Housing “are proving that housing can be an essential platform for the delivery of health care and other services,” according to the report.
  • Medicaid Home and Community-Based Services waivers also enable low-income seniors to receive assistance in their own homes and communities rather than having to move into more expensive institutional facilities. A few states are also using Medicaid funds to provide housing-related services to help individuals move out of more costly nursing homes and back into their communities.

“These are all positive developments,” the report states. “But with millions of Americans about to enter the senior ranks, the current window of opportunity is small and narrowing. Strengthening the collaborative bonds between health and housing must become an urgent national priority as we prepare for the demographic changes ahead.”

Written by Eric Pianin of The Fiscal Times

(Source: The Fiscal Times)

Study: Baby Boomers will Drive Demand for Apartments

© REUTERS/Robert Galbraith
© REUTERS/Robert Galbraith

The volatile U.S. multifamily housing market has returned to pre-recession investment levels, driven largely by millennials putting off home-buying and settling for rentals, but in the long term it will be baby boomers that will drive the market as they downsize, according to the Kansas City Federal Reserve.

Millennials, those born between 1980 and 2000, have shown strong interest in apartments as the economy has recovered, partly because of a preference for city living but also because they are delaying marrying and having children due to debt and unemployment.

Kansas City Fed senior economist Jordan Rappaport wrote in a report that the share of young-adult households renting apartments in multifamily units decreased from 2000 to 2007 when looser mortgage credit standards and expectations of rising house prices made home ownership more attractive, but the share has since returned to normal levels.

Older Americans, meanwhile, are “increasingly downsizing” to apartments, generally beginning around age 70 and doing so more often by age 75, Rappaport wrote.

The oldest baby boomers will turn 70 next year, and the number of Americans aged 70 and older will increase by more than 20 million in the next 15 years, the Census Bureau projects.

“In consequence, multifamily home construction is likely to continue to grow at a healthy rate through the end of the decade and thereafter remain well above its level prior to the housing crisis,” the report said.

Building permits for the multifamily segment soared 24.9 percent in May, and permits for buildings with five or more units reached their highest level since January 1990.

The report said that builders would need to adapt to the changing trends because while millenials lived in compact city spaces, older buyers tended to want more space and amenities.

Written by Megan Cassella of Reuters

(Source: Reuters)

4 Ways Saying ‘No’ Can Save Your Retirement

© AmmentorpDK/Getty Images
© AmmentorpDK/Getty Images

After years of dreaming and planning, you’ve finally said goodbye to the 9-to-5 and retired.

Adjusting to retirement and living with a fixed budget and a more flexible schedule can take months. Experts say one of the key things to do during the early days of retirement is to set limits, on the new demands you may face on both your time and your money.

It’s tempting to say “yes” to friends and family who think you now have unlimited time to babysit or run errands on their behalf. And it can be hard to deny requests, especially by grown children, for financial assistance that may have been easier for you to give while you were still bringing home a paycheck.

“We all have different ideas of our lives and what our dream retirement looks like,” says Donna Butts, executive director of Generations United. “There are some grandparents or older adults who think that they are being taken advantage of or asked for things too often, but there are many who feel like they aren’t asked enough. The most important thing is to communicate ahead of time.”

The happiest and most successful retirees have a plan in place around both their finances and their lifestyle before they ever stop working. That may include providing time and money to loved ones, but only as it fits within a retirees’ own plans.

Still, saying “no” is one of the most important things you can do to ensure a successful retirement, both financially and emotionally. It may be difficult at first, but it gets easier with practice, and it gives you a chance to say “yes” to the things that can bring you joy. Here are 4 times it’s OK to say “no”:

1. To family financial needs
Whether it’s your own aging parents or grown kids looking for help launching their own careers, a growing number of Baby Boomers — more than 43 percent of U.S. retirees — are providing regular financial support to family members, according to a report in May from HSBC.

If you’ve got the means to provide the assistance that’s fine, but planners say that most retirees are putting their own security at risk by providing that kind of financial assistance. “Retired people who do want to continue to support their children can see what they can afford and make an annual gift to them,” says Ryder Taff, a portfolio manager with New Perspectives in Ridgeland, Missouri. “They make it clear that this is all that they will give and it makes it easier to say no when the child asks for more.”

If you can’t afford, or don’t want to continue supporting your kids, talk to them about adjusting their lifestyle so that they need less money or looking into options borrow to cover their costs. (Remember they can borrow money for college or a home, while you can’t borrow cash to pay for retirement.)

Saying no to aging parents when aging parents need medical help may be more difficult, but it’s worth checking in with your siblings to see if costs can be shared or looking into government programs that can provide assistance to low-income seniors.

2. To time-consuming favors
You’re retired, and suddenly everyone thinks you’re free to drive him to the airport or wait around for deliveries. Of course, making life easier for your loved ones is an important part of being a good friend or family member and can offer satisfaction and rewards of its own.And for some people, certain time-consuming activities—like watching grandkids—are the ideal way to spend a retirement.

For others, though, the time commitment of some favors can lead to resentment. “Eventually that resentment is going to squeak out somewhere else,” says stress relief coach Ryan West. “Resentment is not a happy place to be, and that’s one of the reasons we see so many health problems in retirement.”

If that’s the case, give yourself permission to set limits on the time you can give to others. Be honest with the person to whom you’re saying no, and don’t feel guilty. “You don’t owe anyone an explanation for anything,” West adds.

3. To your boomerang kids
So much for that empty nest. One in four adults ages 25 to 34 now lives in a multi-generational household, according to the Per Research Center, driven by young adults who have moved back to their parents’ home (or never left).

Having your adult children in your home can be costly, especially if it’s postponing your plans to downsize or if you kid is not paying his share of the bills. Have a frank discussion with your child about when he or she plans to move out, and start collecting rent. (Teaching your children how to budget for the expense will help once they’re on their own.  If you don’t need the cash, put it into a savings account on their behalf.)

4. To keeping up with the Joneses
Once you’ve said ‘no’ to everyone else, make sure you’re able to say ‘no’ to yourself once in a while as well. If your retired friends are taking lavish vacations and dining out often, it can be tempting to follow their example. After all, you worked hard for decades to get to this retirement.

“Unlike pre-retirees who are still working and may have an opportunity to bring in more income to offset overspending, retirees have a greater need to live within that budget,” says James Nichols, head of retirement income and advice strategy for retirement solutions at Voya Financial. “You need to be honest with yourself and with your peers.”

You should certainly allot some money in your budget for leisure and vacations, but only after making sure that your long-term retirement security is on track. After all, you never know what the Joneses real financial picture looks like. Maybe, they need to work on saying ‘no’ also.

Written by Beth Braverman of The Fiscal Times

(Source: The Fiscal Times)

15 Stocks that Profit from the Graying of America

© Getty Images
© Getty Images

Roughly 10,000 baby boomers turn 65 each day, and this trend is expected to continue for the next 14 years. The aging of America is a major demographic driver and impacts consumer spending trends – and in turn, stocks and financial markets.

Baby boomers represented 26 percent of the U.S. population at the end of 2014, or about 75 million people, according to the Census Bureau. “The boomers have the most disposable income in the system and will for a number of years. There are more millennials, but they don’t have the assets of the boomers,” says Rodney Johnson, principal at Dent Research, a research and newsletter firm based in Delray, Florida.

“Boomers value quality, and you can see that in everything from their grocery bills, which are heavy in organic produce, to their home remodeling,” says Charles Sizemore, founder of Sizemore Capital Management, a Dallas-based registered investment advisor.

What stock sectors and companies are benefiting and poised to profit from the changing demographics ahead? Investors looking to ride the trends of baby boomer spending in the years ahead can consider what boomers need, want and what they do.

Stock sectors that promote progress in health and well-being, such as health care, technology, physical fitness, pharmacy and financial services will remain promising for investors, says Ernie Cecilia, chief investment officer at Bryn Mawr Trust, a full-service wealth management business in Bryn Mawr, Pennsylvania. “Boomers are increasing their dependence on advancement in these areas to enhance their overall well-being and prosperity,” Cecilia says.

What do boomers need? 

The health care sector has been on fire in 2015. The health care sector covers a wide range of industries, including pharmaceutical companies, biotechnology companies, managed care companies, hospital management firms and the makers of medical equipment. “Though they’d probably prefer this wasn’t the case, boomers are buying more medical care,” Sizemore says.

Top picks within health care include pharmaceutical firms. “We think the pharmaceutical companies will have another incredible run. They are buying smaller research and development companies that are developing new therapies,” Johnson says.

Here are five stocks Cecilia says may benefit from these trends:

  • Thermo Fisher Scientific Inc. (TMO) provides analytical instruments and technological equipment for medical practices all over the globe.
  • Novartis AG (NVS) focuses on oncology, heart failure and psoriasis.
  • Gilead Sciences Inc. (GILD) specializes in biotech and is known for its innovation in hepatitis C treatments.
  • Walgreens Boots Alliance Inc. (WBA) is a global player with strong sales through retail and wholesale pharmaceuticals.
  • Prudential Financial Inc. (PRU) delivers solutions for personal finance needs, such as annuities or 401(k)s.

What do boomers want? 

Consider how boomers spend their time. They like to shop online, so think about (AMZN) and eBay Inc. (EBAY). “My parents are shopping online because, frankly, they don’t want to go anywhere. They are driving trends at Amazon, which is on track for $100 billion revenues this year,” Johnson says.

“Boomers have extra disposable income, which they are willing to put into houses, high-end toys or products,” says Scott Rothbort, president of Lakeview Asset Management, an investment firm in Henderson, Nevada.

Four other stocks to capitalize on this trend are:

  • Apple (AAPL). While boomers may not be early adopters of new technology communication and entertainment products, they do embrace them. “They like high-end gadgets like iPhones, iPads and Apple watches,” Rothbort says.
  • Lowes (LOW) and Home Depot (HD). Boomers want to improve their homes through renovations or buying new homes. “Most people don’t move when they retire. Over 65 percent stay where they are,” Johnson says. A lot of boomers will choose to renovate and update.
  • Toll Brothers (TOL). Some boomers want a new house. “Toll is a high-end homebuilder, and they are doing quite well with empty nesters who sell their houses and buy smaller luxury homes,” Rothbort says.

What do boomers do?

They travel. They go out to eat, but they are still conscious of their budgets. “Casual restaurants should do very well. Boomers like to go out, but fast food is not where they are. They want a little cache, but still in a modest price range,” Johnson says. One stock to consider in that area is Bloomin’ Brands (BLMN), which operates restaurants including Outback Steakhouse, Bonefish Grill and Carrabba’s Italian Grill.

Boomers want to stay active and are willing to embrace technology to help. Fitbit (FIT) fits in with both the physical fitness and technology trends. “Fitbit promotes the incorporation of physical fitness into a daily routine with minimal hassle,” Cecilia says.

Boomers like to travel. “People go on cruises. They are traveling more. They have no problem going on a cruise every three months. Royal Caribbean Cruises (RCL) and Norwegian Cruise Line Holdings (NCLH) are my two top picks. They are good, well-managed companies,” Rothbort says.

Investors should also consider the nostalgia factor. “Look at today’s 40-year-old man and figure out what car he wanted but couldn’t afford when he was 16. Buy that car today, at jalopy prices, and sell it to one of those 40-year-old men in another five years, when he’s having a midlife crisis, thinking back to his youth and looking to restore a classic car,” Sizemore says.

Finally, remember grandparents like to spoil their grandkids. “Don’t neglect the grandparent angle. Look at what grandparents are spending money on today, and understand that there will be a lot more grandparents coming down the pipeline in the years ahead, Remember, the millennials – the boomers’ kids – have barely started the family formation process,” Sizemore says.

Copyright 2015 U.S. News & World Report

Written by Kira Brecht of U.S. News & World Report

(Source: U.S. News & World Report)

Wealthier Boomers are Shunning Homeownership

© Victor J. Blue/Bloomberg
© Victor J. Blue/Bloomberg

The U.S. home ownership rate is at the lowest level in 25 years and is widely expected to go even lower. That’s not just the result of younger Americans struggling to make ends meet to save for a down payment on a home. It is increasingly the result of middle-aged, higher income Americans choosing to rent.

Renter growth is now at the highest level in 30 years, and families or married couples ages 45–64 accounted for about twice the share of renter growth as households under age 35, according to a new study by the Joint Center for Housing Studies at Harvard University. In addition, households in the top half of the income distribution, although generally more likely to own, contributed 43 percent of the growth in renters.

“We do think we’re in the later stages of a rebalancing between owning and renting,” Fannie Mae chief economist Doug Duncan said in an interview Wednesday on CNBC.

Duncan pointed to demographics. Baby boomers are now moving out of their homeownership years, while Generation X, a smaller group by 6 million to 7 million, also has a growing preference to rent after being hit hard during the recession, losing income, credit and even their homes.

The homeownership rate is now 63.7 percent, according to the U.S. Census, down from the over 69 percent peak in 2004.

Because of that, rental apartment occupancy is now at an all-time high, and rents are rising at twice the pace of inflation. In turn, that is putting pressure on renters young and old, but not necessarily pushing them to homeownership. Higher rents mean it is more difficult to save for a down payment. More than half of U.S. residents report having had to make at least one sacrifice or tradeoff in the past three years to cover their rent or mortgage, and the highest segment of those sacrificing is renters (73 percent), according to a report by the MacArthur Foundation.

Majorities of Americans continue to believe that it is challenging to find affordable rental housing in their own communities (58 percent in 2014 and 2015), and housing to purchase (60 percent in 2015, 59 percent in 2014), and even more challenging for families at the median income level (65 percent), young adults (80 percent), or families at the poverty level (89 percent), according to the MacArthur Foundation.

Apartment construction is booming, but much of it is in urban centers, catering to wealthier renters.

“It’s an older renter, looking to downsize that doesn’t want to own anymore,” said Douglas Firstenberg, principal of StonebridgeCarras, a real estate development and investment firm, standing outside one of its brand new rental buildings in downtown Bethesda, Maryland. Studios in the building start at $2,500 per month, and the most expensive unit is $6,000.

Rents are surging in the double digits for apartments and single-family rental homes. New apartment construction, now at the highest level since 1989, should ease the burden in coming years, adding supply to the demand, but it is not enough.

“While affordability for moderate income renters is hitting some cities and regions harder than others, an acute shortage of affordable housing for lowest-income renters is being felt everywhere,” said Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies. “Between the record level of rent burdens and the plunging homeownership rate, there is a pressing need to prioritize the nation’s housing challenges in policy debates over the coming year if the country is to make progress toward the national goal of secure, decent and affordable housing for all.”

Written by Diana Olick of CNBC

(Source: CNBC)

Most Americans Say Their Children Will Be Worse Off
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The next generation of Americans will be healthier, their parents say, all except for their finances.

Barely more than one in 10 (13%) American adults believe their children will be better off financially than they were when their career reached its peak and just over half (52%) believe their children will have less disposable income than they did in the future, according to a survey of more than 1,100 American adults released Wednesday by life insurer Haven Life and research firm YouGov. What’s more, just 20% of Americans believe their children will have a better quality of life when they reach their age.

“For the baby boomer generation, pocket money from mom and dad was only part of their early childhood,” says Yaron Ben-Zvi, co-founder and chief executive of Haven Life. “Today’s parents are increasingly prepared to worry about and provide for their children’s financial well-being well far into their adulthoods.” (In fact, 40% of millennials say they get some kind of financial help from their parents, according to an April 2015 Bank of America/USA Today survey of 1,000 kids and 1,000 parents.)

Why do parents believe that their children are faced with bigger financial challenges? They are saddled with more student loan debt than previous generations. The number of borrowers who default (those who are at least nine months past due) rose to 1.2 million annually in 2012 from around 500,000 per year a decade ago, according to the Federal Reserve Bank of New York. And many young people — especially those living in big cities — are still priced out of the housing market.

Studies also show that the better start children have in life in terms of financial support and education, the more likely they are to surpass their parents’ earnings. Children raised in low-income American families are more likely to have very low incomes as adults, while children raised in high-income families can anticipate a much bigger jump in income, according to a report — “Economic Mobility in the United States” — released last month by researchers at Stanford University.

Their future is brighter in one way, parents say. Two thirds (66%) believe their kids will be as healthy or have a healthier lifestyle and, as such, will have a higher quality of life, the Haven Life/YouGov survey also found. Some 81% of millennials exercise regularly versus 61% of baby boomers, and millennials take more fitness classes, according to research group Nielsen. Unlike many of their parents, they’re also growing up in a country where smoking is banned by 36 states in workplaces, restaurants and bars.

Despite their parents’ concerns, millennials —those born between 1981 and 1996 — appear to be more optimistic about their own future. Relative to every other age group, they’re most likely to say their situation has improved relative to a year ago, according to a recent study by personal finance site In all components of the site’s financial security index — savings, debt, net worth, overall finances, and job security — millennials were the most likely of all age groups to note improved conditions versus a year ago.

Written by Quentin Fottrell of MarketWatch

(Source: MarketWatch)

11 Tips for Starting a Business in Retirement

The baby boomer generation is redefining retirement. While their parents may have looked forward to golf in their golden years, many people heading toward retirement today are thinking about work instead.

Some of that focus on punching the clock is necessity, and some is desire. Most baby boomers don’t have a pension, many have not saved enough for retirement and few can live on what they expect to collect in Social Security. But many also enjoy work and want to continue to use their skills.

“They’ve been forced to re-examine this whole concept of retirement,” says Jeff Williams, who owns, which provides training and consulting to entrepreneurs.

The desire to work on their own terms, and perhaps use that work to make a difference in the world, has led to an explosion of entrepreneurship among older Americans. People age 55 to 64 accounted for 25.8 percent of the businesses started in the last year, according to the Ewing Marion Kauffman Foundation’s 2015 Kauffman Index: Startup Activity. A 2014 survey by, which helps older Americans find ways to use their skills for the greater good, found that 39 percent of the​ respondents were interested in starting a business or a nonprofit organization.

“It’s an opportunity to maybe do something that you’ve really wanted to do for a long time,” says Nancy Collamer, author of “Second-Act Careers.” Many retirees want to work on their own terms, follow their passions and set their own schedules. And, of course, many older people have been forced out of their jobs sooner than they had planned.

While it can be fairly easy to start a business, particularly one that requires no office space or retail location, it isn’t for everyone. To make it work, you need to have the right idea at the right time, plus the skill to get your product in front of buyers.

“You need to really think about why you’re doing it,” Collamer says. “Most boomers pursue entrepreneurship for lifestyle reasons. … At the end of the day, it is a business, and you need to be solving some problem in the marketplace.”

Some may discover that pursuing their passion doesn’t fit into the traditional for-profit model. For those people, starting or joining a nonprofit, or using their talents either as a volunteer and paid contributor in the nonprofit world may be a better fit.

“There’s a huge amount of consulting that happens in the nonprofit sector,” says Marci Alboher, author of “The Encore Career Handbook” and vice president of You could use your talents in retirement to start a consulting business that serves nonprofits or consult as a volunteer.

“You can start a business that has both a revenue-generating value as well as a social value,” Alboher says. Launching a business that doesn’t require a brick-and-mortar location can often cost less than $10,000. But your work doesn’t end there. Building that business into an enterprise that returns a significant profit takes time and skill. Experts see opportunities in consulting, services that cater to baby boomers and older people, caretaking and businesses that provide services to other small businesses.

“It takes a while until you lay the groundwork, you get your customers and you hit your groove,” Collamer says.

Here are 11 tips for starting your own business in or near retirement:

1. Determine whether your idea is really a good business plan.

© Image Broker/Rex Features

What problem does it solve? “Be very honest with yourself in the business idea you come up with,” Williams says. If your passion doesn’t translate into a viable business, maybe you’re better off pursuing it as a hobby or volunteer. “Don’t worry about finding the next hot business idea,” Collamer says. “Just take a look around you and see where’s the need.”

2. Evaluate your skills. 

Do you have an ability to do all the tasks necessary to make your business a success? “Make sure you’re really good at it,” Williams says. “You have to have the passion, but you have to have the capability, too.”

3. Consider the time involved. 

Most people don’t want to work 80 hours a week, or even 40 hours a week, once they’ve reached retirement. “It’s important to figure out a way to do it in a way that’s not all-consuming,” Collamer says. She advises people to stay away from starting brick-and-mortar businesses that require your constant presence, such as restaurants and stores.

4. Get good advice.

© Hero Images/Corbis

Most cities have lots of free and low-cost resources to help beginning entrepreneurs. Some also provide good networking opportunities. You should also look for conferences and trade associations in your field.

5. Figure out how to finance your startup.

Many businesses, especially those with no physical location, can be started for a minimal investment. If you need six figures to get your dream business off the ground, you may need funding or investors, which create additional layers of complication. Don’t invest money you can’t afford to lose.

6. Know if you want to manage others or can handle the isolation of working alone. 

Many people who start businesses in retirement don’t want the burden of managing employees. On the other hand, if you’re running a one-person business, you’ll end up spending a lot of time by yourself, and not everyone likes that either. Decide which setup is the best fit for you before getting too far in the process.

7. Have an exit strategy. 

© Monkey Business Images/REX

If you start a business when you’re 65, you may be ready to stop running it when you’re 75. Have a plan, whether it is to leave the business to your children, sell it or just shut it down. You should consider writing down your plan and even sharing it with your spouse and children.

8. Use your professional connections.

People who have been in the workforce for a long time know a lot of people. That gives you immediate access to potential customers as well as consultants who can help you get your business off the ground.

9. Embrace technology. 

© Monkey Business Images/REX

If you’re going to run a business, you may need to learn social media, online commerce, website management and other technical skills. “Many of these things are just plug and play,” Collamer says. “It really enables you on a shoestring budget to have the look of a high-end business.”

10. Protect your assets.

Make sure your business structure protects your assets. The best way to do that will vary by state and by the size of the business. If your business goes down the tubes, you don’t want to lose your savings as well.

11. Don’t expect overnight success.

You may need to try several things and radically change your initial business plan before you find a formula that works. “Understand that this whole journey to an encore career is not going to be a linear thing,” Alboher says. “Let yourself take some rides and try stuff.”

Written by Teresa Mears of U.S. News & World Report

(Source: U.S. News & World Report)

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