Baby Boomers and their assets

[edna_mode]

Comic on Gen X and real estate. Not sure I agree!
http://2.bp.blogspot.com/-AT9fFMD5bms/TuhTshwhG8I/AAAAAAAACh0/aV_Xppuqo48/s400/genxx.jpg

[sdgrrl]

[quote=edna_mode]Comic on Gen X and real estate. Not sure I agree!
http://2.bp.blogspot.com/-AT9fFMD5bms/TuhTshwhG8I/AAAAAAAACh0/aV_Xppuqo48/s400/genxx.jpg%5B/quote%5D

That is great. Hmmm…in SD I would agree. In other areas I find you can have your cake and eat it too.

Thank you for sharing.

[The-Shoveler]

I think also boomers have been colored a bit by having lived (and worked) through some very high inflationary periods.
It was buy big now you will be able to afford it later. (when you have been living through 10-14% wage inflation). — that counts promotions etc…. as well.
Not so much in later generations I think but X should have seen the tail end of that.

the 60’s had some high inflation also the weird low-inflation period starting mid 90’s I think (well weird from a boomers Perspective).

What X views as cheap homes was just the work of inflation (well for the most part).

[flyer]

.

[flyer]

[quote=edna_mode]Comic on Gen X and real estate. Not sure I agree!
http://2.bp.blogspot.com/-AT9fFMD5bms/TuhTshwhG8I/AAAAAAAACh0/aV_Xppuqo48/s400/genxx.jpg%5B/quote%5D

Per the above post, it’s interesting how younger generations might think BB’s have had to choose between having a house or having a life, when we, and most people we know–other airline pilots, real estate investors, film executives–all of whom happen to be BB’s–have found it is definitely possible to have it all. Apparently misperceptions abound.

[livinincali]

Boomers are in their peak asset accumulation years still. They are near the top of the wage scale and all looking for assets to fund their retirement years. Assets are purchased with discretionary income, while mortgage debt is debatable stocks and bonds are not. The problem is that not only will some boomers look to cash in their assets, the demand for assets from the boomer generation will shrink as well. We all know the next generations for the most part as broke as hell and up to their eye balls in debt. Always ask yourself who are you going to sell to. Could your kids or your neighbor kids afford to buy your house at it’s current price. You have to sell to somebody’s kids.

I just don’t see how this ends well. At a macro level I expect most assets prices to crash as the supply/demand curve switches. That said there are probably various pockets of assets that will always remain valuable, it’s just incredibly difficult to guess right. The bottom line is comfortable retirement for the masses is a new concept in society and we likely don’t have the economy or resources to support it.

[The-Shoveler]

I think “Owner Equivalent Rent” caught Gen-X off guard (some Boomers as well)
They were always used to inflation following home prices (SURPRISE!!!).

Yea that did not happen (the bust of the 90’s should have been a shot across the bow).

Now you got the Fed trying to figure out how to do this without it looking obvious IMO.

[Jazzman]

You need a pension and/or assets that provide income to retire. The challenge for the latter has been so much volatility in stocks and bonds of recent, it has forced many into RE, or to hold onto rentals for the yield. That trend might reverse if the economy improves and baby boomers feel better about financial products, especially bonds. Income and capital preservation becomes more important in your later years. When asset prices get artificially inflated, it doesn’t necessarily inspire confidence. If you don’t have ties to a particular place, downsizing and moving is an option to release capital, but the problem of where to invest for income doesn’t disappear. I would imagine many boomers are also cash hording at the moment.

[The-Shoveler]

I think the percentage of boomers who hold rentals is fairly small.

The issue in SoCal I think as well for retiring boomers is (where is it better ?)
If they don’t need to sell their primary this is.

Sure some will be forced by health to downsize etc… but it is not going to be all at once.

It’s going to be a slow onzy_twozy process.

[FlyerInHi]

Michael Fink of black rock says there is cause for worry.

Can people living to their 90s expect to retire in their 60s?

[livinincali]

[quote=Jazzman]I would imagine many boomers are also cash hording at the moment.[/quote]

Some might be but with many not having enough saved for retirement, they are probably more likely invested in riskier assets looking for the 8-10% that always gets touted.

The reality is that many boomer retirees are significantly exposed to the stock market. Many have pensions or 401K plans with few options. The big problem with asset being sold isn’t that some boomers will hang on to assets because they aren’t giving them away. The problem is pension funds don’t have that option. If they are on the hook for pension payments that exceed new money coming in they are forced sellers.

[sdgrrl]

Gen X and latter for the most part will not have any type of pension. My hubbie’s two grandfathers both worked for Ford. One was white collar and the other blue collar. The blue collar one retired in his mid 60’s and lived till he was 97. The man had a great, albeit simple life.

My father in law receives his military pension, a pension from American Airlines, one from a co called Cobra and then SSI. The man is making more now then when he worked. He worked hard and I’m happy he gets to travel non stop and just enjoy life.

Flash forward to my hubbie- he invest in his 401k to the max, but the numbers still don’t make us feel comfortable. My income goes to savings as well, but it will take a great great deal of work to have the retirement my GF and FIL have had.

[Coronita]

[quote=sdgrrl]Gen X and latter for the most part will not have any type of pension. My hubbie’s two grandfathers both worked for Ford. One was white collar and the other blue collar. The blue collar one retired in his mid 60’s and lived till he was 97. The man had a great, albeit simple life.

My father in law receives his military pension, a pension from American Airlines, one from a co called Cobra and then SSI. The man is making more now then when he worked. He worked hard and I’m happy he gets to travel non stop and just enjoy life.

Flash forward to my hubbie- he invest in his 401k to the max, but the numbers still don’t make us feel comfortable. My income goes to savings as well, but it will take a great great deal of work to have the retirement my GF and FIL have had.[/quote]

Worrying about it is half the battle. Most people don’t know or don’t care… The fact that you and your hubby do already says something….

(At least that’s what I keep telling myself…)…

W2 salaries are the worst way to accumulate wealth BTW…

[sdgrrl]

W2 salaries are the worst way to accumulate wealth BTW…[/quote]

Would you expand on that?

Sincerely,

S

[joec]

[quote=flyer][quote=edna_mode]Comic on Gen X and real estate. Not sure I agree!
http://2.bp.blogspot.com/-AT9fFMD5bms/TuhTshwhG8I/AAAAAAAACh0/aV_Xppuqo48/s400/genxx.jpg%5B/quote%5D

Per the above post, it’s interesting how younger generations might think BB’s have had to choose between having a house or having a life, when we, and most people we know–other airline pilots, real estate investors, film executives–all of whom happen to be BB’s–have found it is definitely possible to have it all. Apparently misperceptions abound.[/quote]

This is probably because the cost of required spending like transportation, healthcare, education, food, are all up a ton from before…

When we were young, college and housing in “decent”, non exclusive areas was pretty affordable relative to most incomes I think and college and healthcare was DEFINITELY more affordable compared to now. Even state tuition is very expensive now and we used to pay well over 1k / month for healthcare when 20-30 years ago, it was free for the worker and the family at many jobs.

I don’t think there will be a huge crash though since the whole world is more global now so even if many long time people can’t buy homes here, you have pretty much everyone capable from buying from Asia, Europe, India, Mexico, you name it wanting to diversify their assets out of their own countries and put it in US real estate. In a lot of these other countries, housing is even worst for what you get so there is very limited shortage of buyers compared to supply IMO. It’s a global world/economy now and the US is still one of the safest places to “park” assets from probably China, Brazil, Russia, etc…

Families who own a lot of properties are also probably wealthy so there is limited/no need, rush to sell anything. I know my parents and in-laws all have a fair amount of real estate so there isn’t a cash crunch…

For the “general/typical” American, yeah, it looks bad. But they never had the assets or homes to begin with as mentioned in many retirement/assets owned surveys.

Since these people who own the assets aren’t financially strapped, they will just sell when it comes back. Sorta like if you look at high end collectibles/art, etc…the prices seems to never drop or go down. Those buyers can just wait it out (not counting the crazed 2005 housing bubble of course since that was more of the general no-cash down flipper).

[Author]

Posts