House Rich and Cash Poor: Is this you Mr. and Mrs. Boomer?

Boomers, the sub-prime debacle of the US points to spending less than you earn, accumulating, and working as long as you can. Sometimes you can’t or don’t want to work past 65. Does “freedom 55” even exist anymore?

Striking a balance between being cash rich and house poor involves sitting down and reviewing your finances.

Hey Boomers! Are you house rich and cash poor?

Boomers, the sub-prime debacle of the US points to spending less than you earn, accumulating, and working as long as you can. Sometimes you can’t or don’t want to work past 65. Does “freedom 55” even exist anymore? Would you love to plan for that freedom and do what you’ve always wanted to do? Is it time to look at that bucket list? Re-invent your life? Become proficient at something you’ve always wanted to and make money doing it? What about paying off debt or more specifically non-mortgage debt?

Here’s our reality: the labour force has peaked and will continue to decline. Why? Well, we need growth of the labour force + growth of productivity and the population of boomers heading toward that ‘seniors’ mark is growing. As the self-proclaimed “sandwich generation” are you thinking about staying on and working…. and paying down your mortgage…. Or is it time to start thinking about how to ‘right size’ free up your funds and create a plan to maintain your defined and designed affluent lifestyle with or without dialing back too much?

In other words, if you’re 55 or somewhere in the ballpark are you thinking about reducing overhead or working on full steam ahead until…. well, when? Will reducing overhead make sense now to support your lifestyle later? Have you considered transportation costs, lunches, clothing costs in today’s pre-retirement life vs at retirement? Some expenses will vanish like those $20 office lunches with your colleagues or needing the latest Stuart Weitzman boots or Michael Kors outfit. Want to still take those big vacations and travel when you do manage to retire? Are you financially looking after your kids and your parents? Want to lease or buy that new vehicle you’ve always dreamed about (or still own it from that mid-life crisis)?

Simplest way – move to a smaller home or condo or move out of the big city.

Read: lower taxes, lower monthly upkeep in time and expenses, lower heat and hydro bills and so forth. If you downsize/right size now or the near(er) future and consider investing the equity from your home – there’s no capital gains by selling your home by the way – then your money will be working harder for you than ever and you are well-suited to generate additional income streams. Options are endless and there’s no one-size-fits-all housing plan. Condos are turn key and good buildings will always be good buildings. A condo in Forest Hill is still Forest Hill.

Sometimes renting is cheaper than owning and the city is full of great buildings both with and without amenities and concierge services. Sometimes moving out of your area code or to another part of the city is more economical and still highly practical as a 2 car family (or if you don’t want to ride The Rocket or take cabs). I’ve done the math and it’s actually cheaper to cab around the city than to own and maintain and pay insurance on a vehicle. However, if you’re on the move constantly, it’s not really convenient. What is your lifestyle looking like in the next year? Next 5-10 years?

Net/net Mortgage interest rates are low today (and they have no place to go but up). Rhe stock market is all over the map with dividends being mostly up (today) and down (world economics ebb and flow) and who wants to be forced to sell stocks in a down market to free up their hard earned cash? Freeing up the funds now and having a good financial advisor help you plan your retirement years is a road worth traveling. Let them help you decide if it makes sense to buy or rent given your lifestyle goals, wants and needs. What’s the worst that can happen? I’ve been reading about and looking at financial planning lately and it really is worth doing your homework and figuring out that next move for yourself and your parents and your grandparents for that matter. You don’t want surprises about your extended family’s finances when you’re trying to put your kids through university and thinking about retiring or just retiring and then finding out the bad news.

If you’d like the names of a few good financial planners and mortgage brokers that we work with regularly, then please let me know. By the way, when is the last time you checked your mortgage rates? You may be leaving money on the table ~ your money. The conversation is free!

If you have any thoughts you’d like to share about being the “sandwich generation” then we’d love to hear back from you. Send us a note!

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