It’s no secret that foreclosures hurt home values in the neighborhood but how much will the stabilization of home prices help retirement planning? According to a new paper by the Center for Retirement Research at Boston College, elderly households will be facing increased housing distress during the next two years due to declining home values, high mortgage payments, and interrupted income.
The paper identifies that almost 7% of elderly households surveyed have children or other relatives who are also experiencing housing distress that eliminates a support mechanism for payments that may fall into arrears. If a significant portion of wealth is in housing assets, government officials need to focus on creating a more stable housing environment to assist in liquidity for retirees so that downsizing is a real option rather than spending down assets. Near-term solutions for home price stabilization may help younger seniors and Baby Boomers fortify their retirement assets and should be considered as part of the Obama Administration’s plan to help all Americans prepare for some hard fiscal choices and consequences about Social Security and Medicare/Medicaid changes in the coming years.
For the full paper, visit: What is the Impact of Foreclosures on Retirement Security?