Real Estate Retirement – The bust for baby boomers

Argus Courier News Article
Written by: Elaine Ramirez
Realtor, RE/MAX Marina
(707) 762-5611
Elane@petalumahomes.com
www.petalumahomes.com

The baby boomers are arriving to the golden years….like every other phase of life, the boomers are reinventing what retirement means. My husband, Robert Ramirez, and I are finding ourselves consulting with our boomer clients now more than ever on their real estate investments.

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As Americans live longer, retirement is changing. Ameriprise Financial conducted a groundbreaking study on the five emotional stages of retirement; a survey conducted among 2,000 people in the U.S. between the ages of 40 and 75 in August of 2005. The study asked the 2,000 participants, each at different paths to their retirement what emotions they were experiencing.

What I found interesting about this study is that today’s boomers are not looking at retirement as a single event, bur rather a series of events and emotional stages.

The five emotional stages of retirement as discovered in the study are as follows:

• Stage 1- Imagination: Between 6 to 15 years leading to retirement, people are beginning to imagine what retirement may look like. Those that have substantial savings are optimistic; others that are too busy raising families, thoughts of retirement are far from their minds.
• Stage 2- Anticipation: Is typically five years leading up to retirement. This is a time that people may start to worry about how it will all work out- the reality of a lifestyle change is starting to set in, and although there is an air of excitement, they are anticipating the fear of the unknown.
• Stage 3- Liberation: The third stage usually lasts from the “retirement day” for one full year. It’s the “honeymoon” phase of excitement, relief and hopefulness. New retirees reconnect with their spouses, explore new hobbies, travel, and some even start a new business.
• Stage 4-Reorientation: After the initial honeymoon phase, many retirees find they need to adjust their expectations and plans. The study found that the loss of social connections at work was twice as hard as they expected.
• Stage 5- Reconciliation: The study found that as people really start to slow down, they are finally able to reflect upon their lives. At this point people figure out what brings them contentment; they develop a heightened interest in personal reflection, enjoy spending time with family and cultivating their hobbies and interests.

For Realtors this study is insightful. For instance, in Stage 1 - Imagination - we are typically counseling our clients about purchasing a rental, how they can acquire retirement income, or how they can convert a rental to their primary residence for tax purposes later on. We are helping our clients achieve whatever they can imagine for themselves when they retire.

In Stage 2- Anticipation, we can pretty much guess that retirement is not too far off in the future as we explore their options in terms of where they want to live. Do they want to live in a warmer climate? Do they want to live in a less congested area? And most importantly, if Petaluma is where they want to stay, can they even afford it?

In Stage 3 Liberation- Our clients are in a stage of bliss. We hear about the European vacation that they finally took. We laugh about spouses adjusting to each other’s nuisances, now that they’re 24-7, and we discuss selling the family home that’s now way too big, and how they need to down size.

In Stage 4, Reorientation: We talk about the high cost of living in the Bay area, how our clients want less stress. We often talk about our clients’ children, where their children live, and how they want to be closer to their grandchildren. Often these boomers are leaving the area, or are looking to buy in an age restricted community.

In Stage 5- Reconciliation- At this stage of retirement, I find our clients reflecting upon their lives and about their future. Some are considering Assisted Living Communities; others are moving into (no pun intended) a granny unit on their children’s property. Oftentimes our clients’ children are now part of the decision making process, which makes our relationships come full circle: when we sold homes to the kids they were the ones chiming in.

For today’s baby boomers, retirement is not about withdrawing from what you’ve done; but reinventing where you are.