The Retirement Trifecta – HousingWire

The number one rule of the marketplace is to understand your customer. Knowing what they need, what they want and what they fear is fundamental for success. The housing market has shifted. Today it’s dominated by baby boomers who make up 39% of all homebuyers and 52% of all home sellers.

Known as “Peak 65”, in 2024 more than 12,000 people per day will turn 65. The massive age wave is cresting over the next three years, and by 2030 all boomers will have turned 65. This has baby boomers deeply concerned about retirement, as they are scrambling to prepare for life after work. The expensive and limited housing inventory today has created a scarcity mentality, that has Realtors struggling to provide appropriate housing for an aging population.

The Retirement Trifecta

To retire successfully, to meet the challenges and manage the risks boomers face, they will need to secure their own personal, Financial Trifecta of: 

Income for living, care for aging and housing forever.

These critical needs are the fundamentals of retirement planning, and “Peak 65” demographics will largely reshape housing, real estate and lending for decades to come. 

To understand your boomer customer is to know what they fear most. In this age of longevity, when the boomer generation must plan for decades of life after work, the big fear is running out of money. In my experience of serving boomers for more than four decades, the biggest fear is the loss of their independence, and becoming a burden on their children if they run out of money.

Accommodate the trifecta

Those Realtors, builders and originators who choose to serve this massive market shift, will need to accommodate the Retirement Trifecta. Baby boomers value relationships with those providers, that customize solutions to fit their needs and wants to retire. 

Again, the trifecta is:

1. Income for living: In retirement, a boomer must establish sufficient and sustainable streams of income to meet the rising costs of living longer, in this new inflationary era.
2. Care for aging: Aging is a family affair that requires both financial as well as care-giver strategies, with the cash to pay for it. 
3. Housing forever: Boomers must secure housing that is safe and appropriate for aging, through all the stages of retirement.

Housing costs will likely be the number one expense through retirement. Because 78% of boomers surveyed want to age-In-place, costs of home modification and maintenance will need to be carefully planned out.

Boomers in pursuit of their Trifecta will need us to understand and accommodate the urgent demands of their retirement. A housing professional’s value proposition must extend beyond building and selling homes and originating mortgage loan transactions.  The housing industry must provide real solutions to the challenges that a rapidly growing, elder centric population demands. The industry professionals with the vision to adapt their services will be those who will thrive and help usher in a great new era of American housing.

The housing wealth solution

The baby boom generation has created more housing wealth than any other generation in history. Today, boomers have approximately 13 trillion in available home equity. Boomers home equity will likely grow past 20 trillion by the end of this decade. Today, boomers are living in the very asset needed to help provide for their personal Retirement Trifecta.

To solve the problems we face, and unleash the possibilities of the future, we as an industry must elevate the scope and purpose of our work. We need inspired home-building that includes universal design. We need Realtors trained in matters of aging-in-place, who are committed to guiding senior buyers into buying decisions that will provide housing security for the long-term. We also need a growing professional class of strategic mortgage planners committed to providing home equity conversion solutions that address the demands of the Retirement Trifecta.

From my experience as a home builder, and a mortgage planning specialist, having sat down at more than 4,000 kitchen tables, serving the housing needs of homeowners since 1976, this truth I confidently share with you.

“The single most impactful quality of life decision people make, is the home in which they choose to live.”

Home is where family happens, and we who provide housing have the great privilege, through our life’s work, to make the dreams of those we serve, the possible dream.

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