Before the economic recession of 2008, there were many predictions about the baby boomer generation and what they would do with their time. Many thought that by 2018, boomers would be retired and there would be demand for resort and retirement communities, or 55 and up active adult communities for boomers. However, the recession has changed what we thought we knew about many things, including the boomer generation.
Many thought that the recovery of the stock market and the return of average home prices to 2007 levels meant that boomers would be OK, but that has not been the case. In a 2016 survey, 37 percent of boomers had less than $50,000 in savings.
Many boomers tapped their savings during the financial crisis, to pay or offset liabilities such as student loans for their Millennial children that had to be repaid when their children couldn’t find a job. Additionally, many children moved back in with their boomer parents, adding additional strain to budgets. On top of that, many boomers were also taking care of aging parents.
Because many boomers spent their savings during the recession, many will remain in the work force longer for financial reasons or will have a part-time job.
Additionally, the foreclosure crisis impacted the boomer generation heavily. According to the PWC Emerging Trends Report for 2018, home equity is the largest investment they have, but 7.3 million homes went into foreclosure or short sale between 2007 and 2014, according to data from RealtyTrac.
And, for boomers who were able to hold onto their homes during the crisis, they still have difficulty finding buyers. Millennials base their decision to purchase a home on the qualities of the house, whereas boomers judged based on the size. Further, many Millennials simply cannot afford to buy the larger homes the boomers lived in, which presents a problem for boomers who are selling their homes.
However, boomers remaining in the work force isn’t all bad news: according to the PWC 2018 Trends report, 81% of executives surveyed think the recession has caused or will cause workers to stay in the work force for an additional five years, with some surveyed saying retirement could be delayed by up to ten years. This may relieve pressure on already strained public resources, particularly as median lifespan increases.
Additionally, the United States is expected to face a severe labor shortage through the middle of the 2020’s as a result of the smaller Gen Z (born from 1995-2001) and tighter restrictions on immigration into the United States.
As of 2016, nearly 9 million people age 65 or older were still in the workforce. There are still about 25.5 million boomers in the age range of 55 to 64 that will also remain in the workforce. Boomers still have time before senior housing becomes an issue (usually around age 80) for them. However, the good news is that ultimately, the trend toward boomers remaining in the workforce will have a positive impact on the economy and real estate markets in the United States.
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Brian Gormley, Esq. is an attorney licensed in Maryland and the District of Columbia specializing in real estate, probate, estate litigation and other matters. If you need assistance, please use the Contact Feature at the bottom of this page.