WASHINGTON – Older homeowners aged 60-plus years like their homes, many view the equity in those homes as a financial reserve, and a significant share are confident of their overall retirement financial plan and expect to age in place, according to a recent Fannie Mae research study. The homeownership rate among this age group is nearly 80%, the study found.
Empty-nest baby boomers own 28% of the nation’s large homes, while millennials with kids own 14%. A decade ago, young families were just as likely as empty nesters to own large homes.
In 2022, Americans aged 60-plus represented 29% of the adult population and 44% of homeowners. In the next decade, the 60-plus population is forecast by the Census Bureau to increase to 32% of the total adult population.
If household formation and ownership rates remain unchanged from 2022 levels, the change in population levels alone would mean the 60-plus population could approach nearly half of all homeowners in the next decade.
In April 2023, Fannie Mae conducted a research study of a nationally representative group of 1,141 homeowners aged 60-plus.
Approximately two-thirds of that group were already retired, and, of those still working, a majority planned to retire in the next five years. All were asked about their financial plan for retirement and the role they expect their home to play in that retirement.
An additional group of 307 older homeowners with lower incomes and lower amounts of retirement assets and savings were also surveyed to understand the differences in attitudes and needs among older homeowners facing greater financial constraints.
Prior to fielding the survey, Fannie Mae also conducted in-depth interviews with 25 older homeowners to gain deeper insight into their motivations and attitudes, and to better inform the survey work.
Key insights
Our research study identified several important insights for older homeowners (unless otherwise noted, percentages are from the nationally representative sample), including:
Older homeowners are confident in their retirement planning: 72% were confident they will have enough income during their retirement, and that confidence grew with age. Economically disadvantaged homeowners were less confident, at 55%.
Most are not interested in using their home equity as retirement income: Only 15% said that they would consider using their home’s equity for extra funds needed during retirement, and economically disadvantaged owners felt similarly.
A majority plan to age in place: 56% said they will never sell; 27% said they might sell at some point; and only 17% said they have already sold or plan to sell their home. The retired older adults who sold their homes said they did so for a variety of reasons, including moving to a home that better fits their needs, financial reasons (e.g., lower taxes, lower cost housing), living closer to family/friends, and living in a warmer climate.
Many report feeling an emotional and financial “lock-in” effect: Older homeowners’ disinclination to move is tied to the love of their home, pride in debt elimination (especially their mortgage), community engagement, and access to known services.
Although generally averse to debt, there is modest interest in using loan products for home improvement, and nearly half would be interested in a home-maintenance/repair service designed for retirees at a lower cost: 26% expressed interest in a home improvement loan, and 48% were interested in a home-maintenance/repair service at a lower cost, representing the largest interest across programs and services.
Over one-third are open to retirement advice: 38% said they were open to receiving advice; and the younger the homeowner, the more open they are to receiving retirement advice (43% of those under age 65 vs. 33% of those over age 80).
As outlined below, these insights have broader implications for the overall housing market, including the potential availability of homes for sale, the maintenance of an aging housing supply, home equity product interest, and necessary retirement services.
Confidence in retirement planning
Many older homeowners felt prepared for retirement and thought they had planned enough to live comfortably and within their means during retirement. Survey results show 72% of older homeowners felt confident they will have enough income during retirement, and close to 60% agreed they had “done a lot of research and planned quite well for retirement.”
Within the cohort, there was an age progression to these questions, with older homeowners (ages 70-plus) more confident that they have planned well compared to younger homeowners (ages 60-69).
Over 60% of older homeowners wished they had saved more for retirement when they were younger, and significantly more mortgage holders (68%) than outright owners (56%) wished they had saved more for retirement. Over one-third of older homeowners were also open to receiving financial advice for retirement.
Here, too, there was an age progression within the cohort, with younger homeowners more open to receiving advice than older homeowners.
Copyright © 2024 States News Service
