Boomers, retirement and mortgages

by Shawn Lackie

The baby boomer segment has been one of the most prolific, for ages, for a number of reasons. Music (hello classic rock radio stations), art, business, growth, health, sporting events, take any topic and it has been affected in some way by the Boomers. This has been mostly in a good way, but in its wake there may be some odd consequences down the road, for future generations, thanks to the Class of 1946-64.

This generation has witnessed the largest growth, in the housing business, in the history of buying and selling. The group has also radically changed how we live and how long we live at any given address. Our grandparents, for the most part, would buy a home and that is where they would stay for pretty much their whole life. Then, it would be, into a retirement home or for many they would move in with one of their adult children, for their remaining years.

Along came the Boomers and over time it became cool to move. At one point, statistics pointed to people moving, on average, every three to five years. In many cases, it was just for a change, there was no big impelling factor. I had one client, many years ago, who moved, on average, every four years, and all in the same town. I asked why, and, with a shrug, they said, they just wanted something different.

Obviously, when the pandemic hit, there were many people moving with good cause. Yet, when the dust settled after all of that chaos, many decided maybe they should have stayed where they were in the first place and were now priced out of any thoughts of returning.

Financial institutions have eased the burden on home owners with the reverse mortgages. Now these same homeowners can borrow against their equity, and age in place, which also seems to be coming more popular, given the state of affairs at many seniors facilities. The notion, they would leave a legacy to their children, seems to be partly lost in the shuffle.

Many parents paid for the university/college/post secondary educations for their kids. In many cases the Bank of Mom and Dad had also helped fund the first home purchase by their kids. So, the idea is, they have done their fair share and for the rest of their time on earth, they will be enjoying life, either by travel or simply having a good time. Reverse mortgages have become all the rage, to support this lifestyle.

In many cases, seniors have carried a mortgage into their retirement years. A recent report from Statistics Canada reveals, in the first quarter of 2024, Canadian households, with a main earner aged 55 to 64, held a combined $315.7 billion (average of $109,337 per household) in mortgage debt, up from $224.2 billion ($83,551) in the same quarter of 2020. For those aged 65 and older, mortgage debt also grew significantly, to $141.2 billion ($27,441 per household) from $97.2 billion (average of $21,195 per household), over the same period.

The last generation would shudder at the thought of doing that. Their main goal was to be mortgage-free by retirement and many celebrated the occasion with a mortgage burning party. Given the price of houses these days, that idea has become fairly remote. Although they are still paying a mortgage, many have also put together a very healthy retirement nest egg to draw from, and that offsets the expense of a mortgage.

The secret has always been to keep the expense side of the ledger much smaller than the income side. With more options available to the retirees, life doesn’t need to be as stressful as in years past, and they can enjoy what they have worked so hard to attain. That’s a good thing.