AARP Issues “Best Retirement Communities” List

July 27 — Every publisher likes to issue “best lists” for the simple reason that all of us like reading them. This week the AARP got in the act, joining Money Magazine and others, with a list of “5 Great Places to Retire”. Somewhat surprising was the fact that 4 out of the 5 communities were cities, with the 5th being a suburb of a big city.

Making the top 5 were: (if available, the Topretirements.com review is linked below):

Atlanta Georgia – Livable southern city with volunteer opportunities and culture
Portland Oregon -Great for cycling, this environmentally friendly center has a young and vibrant atmosphere
Chandler Arizona – This suburb of Phoenix has well designed parks and trails
Boston Massachusetts – This great old city has charm, culture – and its a walkable city too.
Milwaukee Wisconsin – Urban renewal and lakeside frontage on Lake Michigan are attracting baby boomer retirees to its downtown condos

AARP explained its choices by saying it was looking for places that were ahead of the curve. Even though cities “tend to have higher housing costs and taxes …. the tradeoff is that they have the resources to invest in the programs and services that make a place livable: mass-transit systems so people can drive less, expanded sidewalks to encourage walking, better health care, and a wide range of mixed-use housing.” Here is a link to the AARP best places to retire article

Links:
Top 10 Values in Retirement Communities
100 best places to retire

Comments from Mortgage Lender Sends Wall Street Skidding

July 29 — Countrywide Financial advised yesterday that more mortgages from people with good credit were having trouble making payments, news which sent the financial markets into a tailspin. Countrywide is the largest mortgage lender in the country. Hardest hit markets were the some of the strongest and biggest ones – California, Florida, Arizona, and Nevada.

Up to now the bad news in mortgages has mostly had to do with so-called sub-prime mortgages, those underwritten to borrowers with lower quality credit. The news that more mainstream borrowers on prime second-liens (a line of credit or second mortgage backed by a primary mortgage) are defaulting hit the stock market hard, sending the S & P 500 index down 2 percent, or just more than 30 points. On Wednesday the market recovered .4% as the news was digested. Meanwhile today the National Association of Realtors reported that sales of existing homes in June were off almost 4%, about double the expected decline.

Home Prices Dropping
One of Countrywide’s executives was quoted in the New York Times as saying that home prices were falling “almost like never before, with the exception of the Great Depression.” The research firm Case-Shiller estimates that home prices have fallen 2.1% as of the end of April in 20 large metropolitan areas it tracks. Industry experts point out that growing inventories of unsold homes are adding to the problem, keeping prices down and resulting in more homeowners having negative or very small equity.

Implications for Active adult and retirement communities
Obviously the retirement market is different than the sub-prime market. But a negative market is a negative market, even for segments that have been stronger. Our advice would be that if you are a seller and don’t have to be – take it off the market. If you are a buyer, start looking. The market is likely to recover in late 2008 or 2009.

Links: Glut of Homes Rises
Should Boomers Dive in Real Estate Market
Should you purchase your home in a retirement community at auction?
Baby Boomers Invading Singles Condos

Baby Boomers in Drivers Seat as Employers Fret over Losing Them

July 20 – The embedded knowledge base and skills that baby boomers have accumulated over decades of experience are key to the successful running of America’s corporations and institutions. Yet a recent survey by Manpower revealed that only 21 percent have implemented retention strategies to keep them participating in the workforce.

If you are nearing retirement but want to keep on working – either because you want to or because of economic necessity – this phenomenon is something you might be able to capitalize on.

“Older workers have different needs than younger workers, and in order to meet those needs, their job preferences, personal interests and preferred work-styles must be assessed,” said Sharon Birkman-Fink, President and CEO of Birkman International.

Baby boomers are a significant percentage of the current workforce, and are nearly ready for retirement. Experts expect tremendous gaps in competencies and know-how as a result of this demographic wave. By the time many businesses wake up to this loss, it may be too late.Several industries, including electric utilities, oil and gas production, healthcare and the public sector, are already feeling the effects of baby boomer retirements.

“This could be catastrophic, considering that those best able to train replacements will be those that are leaving,” said Birkman-Fink.

How you can use this trend to your advantage
If you would like to continue working past normal retirement age with your current employer, the first thing you should do is open up a dialogue with your manager (or perhaps human resources). Let them know that you might be interested in continuing on, but perhaps under different circumstances. Perhaps you might want to work remotely, on a reduced schedule, or in a different position or location. Negotiations like this need to be thought out carefully. First you need to think through what it is that you want, and in what priority. You also want to make sure that your employer realizes what you bring to the party in terms of attitude, experience, and institutional memory. If your record is strong and your skills are difficult to replace, you just might have some very good leverage to get a situation that is favorable to you and your interests.

Related articles:
Greenspan to Baby Boomers – Deal Now with Financial Uncertainty
When to Start Taking Social Security
Boomj and Social Networking for Boomers

Airparks Let Plane Owners “Hang” Close

July 13 — To any hobbyist the convenience of living near one’s avocation is obvious. For most of us it just involves stepping out to the garage, or down the cart path to the 1st tee. But when one’s hobby is an airplane, hanging out near your wings gets tougher. Airports and hangars don’t grow on trees, and who wants to drive a long way to indulge one’s passion.

Enter the airpark, a surprisingly (to us anyway) prevalent phenomenon. Topretirements.com just ran across a nice blog for plane owners – Living With Your Plane – that specializes in airparks – airstrips with adjacent houses on the property. LWYP has published some helpful research studies and lists on its site.

Research from Living With Your Plane indicates that about 20% of existing airparks have 50 or more attached homes, so some of these communities are substantial properties. Demographically, about 15% of people who live in airparks are over 66 years of age – the predominant owner is between 45 – 65 with no children living at home. Annual income is more than $100,000 and most owners do not consider their airpark home their primary residence.

The site lists 30 airparks that are built on public airfields – most are in the western U.S. A lot more airparks are on the way too. LWYP has published a list of almost another 30 airparks that are under construction or in the planning phase.

If you have a plane, you need to visit this site!

Related stories: Best Retirement Communities Reference
Communities for Stargazers

Frugal Baby Boomer Millionaires Learn to Cope

July 5, 2007 — Most older baby boomers remember John Beresford Tipton, the “Millionaire” who discreetly awarded a million dollar check to some worthy individual every week on TV during the late 1950′s. While people old enough to remember the show (over 55) would still be thrilled at such a gift, being a millionaire just ain’t what it used to be.

One problem is that Inflation has deflated the significance of a million dollars, which has only 54% of the purchasing power it had in 1987 (source: Wall Street Journal). There are a whole lot more millionaires today thanks to inflation and prosperity. Another issue is that real estate prices have soared and become a significant source of illiquid wealth – for boomers fortunate enough to have significant home equity in hot real estate markets. For example, an existing single family home in San Francisco goes for $748,000 and $521,000 in New York. Just owning a home in one of these markets alone gets you close to millionaire status. Problem: You can sell your home, but you still have to live somewhere.

How rich are you?
Let’s say that your millionaire status includes about $300,000 in home equity (the median price of a home is about $220,000 nationally) and $700,000 in retirement savings. You definitely are one of the richest American baby boomers, who typically have about $50,000 in household retirement savings included in a total net worth of about $250,000. You are in the top 2% of Americans – not bad!

What kind of income can you expect?
Presumably if you have this kind of net worth you had some high paying jobs to get to this position, so you are probably used to having more than $100,000 in annual income. Let’s say you invest your $700,000 in 10 year Treasury notes that yield about 5%, before inflation. That will give you about $35,000 per year for the rest of your life, assuming rates stay about the same. Every year inflation will make that $35,000 worth a little less, but that is OK because you won’t live forever (you could draw down the principal), and as you age your expenses will presumably decline. If you tack on a much better than average social security benefit of $24000 for you and your spouse (the average payout is $9360 annually for a single person), that gives you $59,000 in yearly income. A nice living and well above average, but a far cry from being a luxurious income.

The value of a defined benefit pension
Other than government and some non-profit workers, baby boomers are probably the last group who have a chance at getting significant defined benefit pensions (a defined benefit means you are promised a specific annual retirement payment as a pension, rather than guaranteed payments into your future retirement fund). If you are fortunate to have such a pension you can see what a difference these pensions can make, even at some minimum payment like $10,000 a year. Your pension could propel you into the ranks of the comfortably retired.

Strategy for frugal millionaires: Trade in Your home equity
One effective strategy that many active adults over 50 are taking is to trade in their home equity. If you could trade in your $300,000 home in a hot market for an equal or better home worth $200,000 in a less expensive state like South Carolina, you could maintain your current lifestyle while adding $5000 per year in income. As a bonus, this extra income would come in a market where the overall cost of living is less than where you live now. Certainly a strategy worth considering, now that you might have to become the “frugal millionaire”.

Comparing the Retirement Savings of Baby Boomers

When to begin drawing Social Security Benefits

A Surprising Answer: When to Take Social Security Benefits