Boomers won't retire sitting down

June 28, 2005|by JAMES M. WOODARD / Copley News Service

Half of today's baby boomers plan to buy a new home when they retire, according to a new study by Del Webb Corp., a developer of retirement communities.

There are about 76 million baby boomers, and they are the wealthiest generation in U.S. history, the study said.

"The grandkids are the secret weapon for today's active adult communities, and those developments are increasingly being built in locations nationwide," said Dave Schreiner, vice president for active adult development for Del Webb. "Nearly half of all respondents to our survey said staying within three hours of family is an important consideration when deciding where to live."

About 50 percent of boomers expect to move to another state at retirement, and that doesn't necessarily mean a move south or to other areas of the Sun Belt. There has been a move to build active adult communities in the North. However, 66 percent of older boomers indicate they would move for a better community lifestyle, and 54 percent would seek a warmer climate.


Increasingly, retirees are forgoing golf and travel for a briefcase and computer. While 64 percent of all survey respondents said they will retire completely from their current line of work, many will continue to work for a variety of reasons. About 49 percent of younger boomers and 37 percent of older boomers plan to continue working because they need the money. A third of pre-boomers (age 60-69) say they will continue to work because they enjoy it, and 22 percent say they work because it keeps them active and healthy.

In another study - this one by RELO, a relocation referral group - it was revealed that many are buying second homes with the plan to use them as a vacation home now and move into them permanently at retirement time.

"Many boomers are choosing to make their vacation home their dream home, rather than their primary residence," said RELO President Pamela O'Connor. "Many buyers are operating on the delayed gratification principle and setting up their ultimate next egg now while the getting is good."

Title insurance tiff: A few weeks ago, this column reported on the title insurance industry - focusing on both the positive benefits of such coverage and the recent rash of title insurance-related abuses that have surfaced. These abuses are allegedly costing home buyers substantial amounts of unwarranted expenses in home sale transaction closing costs, according to regulators.

The column noted that there was only one state in this country that does not allow title insurance company offices within its borders: Iowa. This state established a title guaranty division to provide needed title protection that is more effective and less costly than the more familiar title insurance, according to reports from Iowa.

In response to that column, I received an interesting letter from James Carney, an Iowa lawyer who represents the Iowa State Bar Association. He provided new insights on the current situation. Here, in part, is what he said:

"One of the issues I have worked on during my entire career is the opposition of legalizing title insurance in Iowa. To say the recent surge of investigations nationwide is a vindication would be an understatement," Carney said.

"We've been telling people for years about the illegal activities, scams, rebates, kickbacks, inflated premium, large commissions paid, and on and on. This industry collected $15.6 billion dollars in premiums from U.S. citizens last year. They paid out about $600 million in claims. There is no other insurance product like it in the United States. Thank God it's illegal in Iowa, and if there's one thing I'm proud of in my legal career it's that we have successfully fought the legalization of title insurance for 30 years."

Carney enclosed a 14-page booklet produced by the State Bar Association titled "Title Insurance: A Fleecing of America." It quotes Sen. Phil Gramm, R-Texas, as saying, "I know how we can cut the initial, upfront cost of buying a house by between a quarter and a third. The way to do it is to do something about title insurance. We could probably do more to promote home ownership by fixing this problem than by any increase in appropriations for housing."

Q: How are homeowners using the vast amount of equity they have accumulated in recent years?

A: Rising home values have indeed produced huge increases in equities for homeowners, and many of them are using the cash in creative ways. The amount of home equity extracted by property owners rose to $705 billion last year - from $266 billion in 1999.

Most of that money was used for purchasing another home, repaying credit card debt, and funding home improvement projects. An increasing number of homeowners are using the cash to purchase investment properties - 2.2 million last year compared to 1 million in 1994, according to a report from SRI Consulting Business Intelligence.

Q: Is home remodeling activity still on the increase?

A: Yes, the home remodeling market continues to grow. This activity showed strong growth in the first quarter of 2005, showing a healthy rebound from activity during some very bad weather periods during the past winter. As we go into the summer season, remodeling projects are continuing to increase of numbers.

"We saw solid growth in the first quarter of this year and continued positive momentum for the remainder of the year," said Dave Seiders, chief economist for the National Association of Home Builders. "Calls for bids, amounts of work committed and backlogs of remodeling jobs are all up, leading us to expect continued healthy growth in remodeling activity for the rest of 2005."

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