Jump to content
House Price Crash Forum
Realistbear

Reuters Article: Do Not Count On Your Home For Retirement

Recommended Posts

Article from Fidelity which is a reality check on MEW and the dream of retirement based on home inflation. Its from the US but we are in the exact same (if not worse) boat as our former colony:

http://personal.fidelity.com/research/stoc...ketsindex.shtml

Your house as a nest egg

11:03 a.m. 04/29/2006 Provided by

(Linda Stern is a freelance writer. Any opinions in the column

are solely those of Ms. Stern. You can e-mail her at

lindastern(at)aol.com.)

By Linda Stern

WASHINGTON (Reuters) - Do you think your house is your retirement nest egg? Think again, say some financial advisers.
Many, if not most, homeowners do expect to retire "on the house" according to the Center for Retirement Research at Boston College.
But at the same time they are reducing their own equity by borrowing against their homes for other expenses.
They may be counting on inflated home values that could fall by the time they are ready to sell and move. They may be counting on a resource they never really want to sell.
In other words, they may not be being very realistic.
"We all say people will sell their house and that's how they are going to live," says Bev Moore of MainStay Investments, a division of New York Life Investment Management.
"But the bubble might be in the process of bursting."
Only 11 percent of older people who are already retired actually expect to live off of their home's value, she says.
"Baby boomers have to stop going to Home Depot and start doing more planning and saving," Moore said.
Home value is not worth nothing, of course. And some advisers unscrupulously push clients into selling real estate and buying stocks, bonds and mutual funds just because they are more profitable for the adviser.
There are good reasons, however, not to pin too much of your future on the value of your house. And, it's hard to know exactly how much your house can and will contribute to your comfortable retirement.
Here are some points for homeowners to consider.
-- What if housing goes bust? Most homeowners will be able to sell their homes for more than they owe on them, but not everybody is safe.
Those at the biggest risk are the ones who stretched loans to the max to buy inflated homes, those who are using home-equity lines of credit for non-housing expenses, and those paying off equity slowly, or not at all, with interest-only mortgages.
Also at risk are folks who own homes in single-industry towns. When a plant closes or oil prices collapse (hey, it happened in the '80s), lots of people leave town at once and they may not be able to sell for enough money to pay off their mortgages.
If you recognize yourself as being vulnerable to a home price rout, be aggressive about paying down your loans and building equity in your home.

Share this post


Link to post
Share on other sites

Wow - if this message starts getting out there it might have a tremendous effect, mightn't it? If people stop mewing then pop goes credit boom and if people stop buying housing as their 'pension' that would help speed up the crash. Super dooper.

Another nice topic, RB, you're a star.

Share this post


Link to post
Share on other sites

This article is about sending your kid to a state school instead of a public school, in order to save much needed money, and the people mentioned in there seem to be professionals, but it looks like their house purchase is killing them. They are banking on the their house as a pension, because they are too broke(!!) to afford one.

If those kinds of 'well off' people can't do it -- who can?

Share this post


Link to post
Share on other sites

This article is about sending your kid to a state school instead of a public school, in order to save much needed money, and the people mentioned in there seem to be professionals, but it looks like their house purchase is killing them. They are banking on the their house as a pension, because they are too broke(!!) to afford one.

If those kinds of 'well off' people can't do it -- who can?

At least their now chavitised off-spring will be guaranteed state housing if they play their cards right.

School fee's aren't like a mortgage where you just hope for the best, the cash should be set aside well in advance. Public school or an au pair, that's a toughie, especially when the latter comes in so useful.

Share this post


Link to post
Share on other sites

This article is about sending your kid to a state school instead of a public school, in order to save much needed money, and the people mentioned in there seem to be professionals, but it looks like their house purchase is killing them. They are banking on the their house as a pension, because they are too broke(!!) to afford one.

If those kinds of 'well off' people can't do it -- who can?

Well I did chuckle at that article because mothers like her are exactly the ones who snigger at our 3 year old car and rented house but at the end of the day they are all fur coat and no knickers.

We might well struggle to give our children the best education but we would never ever pull them out just to keep the au pair, talk about priorities being wrong, I'd go on the game before moving mine into state again.

Share this post


Link to post
Share on other sites

Well I did chuckle at that article because mothers like her are exactly the ones who snigger at our 3 year old car and rented house but at the end of the day they are all fur coat and no knickers.

We might well struggle to give our children the best education but we would never ever pull them out just to keep the au pair, talk about priorities being wrong, I'd go on the game before moving mine into state again.

Did I read right? People snigger at you because you have a THREE year old car?? Blimey, a 3 year old car is pretty new in my book! What's the point in buying a new car every year or two, just to have it depreciate?

Share this post


Link to post
Share on other sites

I've heard it's best to buy a 3 year old car when it has suffered maximum depreciation, then sell at 6 years when you can still get a decent price before it ages to 'banger' status and starts having reliability problems.

Personally, I am of the 'drive till it drops' school of car ownership. There's a certain inverted snobbery in conspicuously displaying on the dashboard of your battered 14 year old Golf that badge of street cool - a can of WD40 - for those damp early morning starts.

Share this post


Link to post
Share on other sites

This article is about sending your kid to a state school instead of a public school, in order to save much needed money, and the people mentioned in there seem to be professionals, but it looks like their house purchase is killing them. They are banking on the their house as a pension, because they are too broke(!!) to afford one.

If those kinds of 'well off' people can't do it -- who can?

Is this mother straight out of the 1950s? Out and out fear of the hoi polloi still lives.

Share this post


Link to post
Share on other sites

At least their now chavitised off-spring will be guaranteed state housing if they play their cards right.

School fee's aren't like a mortgage where you just hope for the best, the cash should be set aside well in advance. Public school or an au pair, that's a toughie, especially when the latter comes in so useful.

We might well struggle to give our children the best education but we would never ever pull them out just to keep the au pair, talk about priorities being wrong, I'd go on the game before moving mine into state again.

Excuse me? When did this forum get so snobby?

Nothing wrong with a state education in my experience...

Share this post


Link to post
Share on other sites

Excuse me? When did this forum get so snobby?

Nothing wrong with a state education in my experience...

No there isn't anything wrong with it, just not much right either in my experience. Not starting a debate but I would eat bread and water before mine would attend a state school again, which is my opinion/progative.

Share this post


Link to post
Share on other sites

This article is about sending your kid to a state school instead of a public school, in order to save much needed money, and the people mentioned in there seem to be professionals, but it looks like their house purchase is killing them. They are banking on the their house as a pension, because they are too broke(!!) to afford one.

If those kinds of 'well off' people can't do it -- who can?

This is being reflected in independent schools here, some of which are feeling the pinch as would-be privately educated students are going to state schools to save the parents money. It's a pretty big story waiting to break from what I've heard.

Share this post


Link to post
Share on other sites

I would say the boomers now, can live off thier homes value if they move to take the equity gains - they can downsize thier big house, to a condo with parking and less property tax, bank the monster diffrence, buy a Thor Airstream motorhome, and look forward to enjoying a great quality of life, being able to afford all the health insurance payments, enjoy the great outdoors and thier families etc... with no worries at all....!

Share this post


Link to post
Share on other sites

I would say the boomers now, can live off thier homes value if they move to take the equity gains - they can downsize thier big house, to a condo with parking and less property tax, bank the monster diffrence, buy a Thor Airstream motorhome, and look forward to enjoying a great quality of life, being able to afford all the health insurance payments, enjoy the great outdoors and thier families etc... with no worries at all....!

Some boomers can do that. But don't forget boomers have also been buying into Gordon's Miracle Economy and leveraged a lot of money to buy their home and a 2nd home. Their pensions funds are collapsing and the cost of sending kids to private school are not in Gordon's CPI basket. When the crash has completed its hideous work the battlefield will be strewn with the financial corpses of young and old alike as an economic meltdown has no favourites.

Few will have saved themselves by following the golden rule of investing: buy low but for goodness sake sell when its high and don't wait until everyone else gets the same idea.

Share this post


Link to post
Share on other sites

When the crash has completed its hideous work the battlefield will be strewn with the financial corpses of young and old alike as an economic meltdown has no favourites.

Very poetic prose!

Share this post


Link to post
Share on other sites

I've heard it's best to buy a 3 year old car when it has suffered maximum depreciation, then sell at 6 years when you can still get a decent price before it ages to 'banger' status and starts having reliability problems.

Depends how much you use it I suppose, a car can approach banger status after 3 years depending on how you drive it. I think I'm going to opt for lease-hire next time, once you factor in the depreciation and interest from leaving the money in the bank it's a better deal than buying one. It all comes down to base-rates and the sort of discounts fleet purchasers can achieve, why not take advantage of both.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.